US import prices see largest surge in two years, raising inflation concerns

US import prices in April experienced their most noteworthy increase in two years, supported by higher costs for energy products and other goods.

According to Reuters, this development suggests that domestic inflation may remain elevated for a longer period, complicating the economic outlook.

The Labour Department's Bureau of Labour Statistics reported on Thursday that import prices jumped by 0.9 per cent in April, marking the largest rise since March 2022.

This follows an upwardly revised 0.6 per cent increase in March.

Economists surveyed by Reuters had predicted a 0.3 per cent rise in import prices, following an initially reported 0.4 per cent gain in March.

On an annual basis, import prices accelerated by 1.1 per cent through April, the largest year-over-year increase since December 2022.

This came after a 0.4 per cent rise in March, which was the first year-over-year increase since January 2023.

The stronger import price data cast a shadow over the inflation outlook, which had shown signs of moderation.

Consumer price growth slowed in April following strong gains in the first quarter, possibly indicating easing of inflationary pressures.

The recent import price increases have added to expectations that the Federal Reserve might begin cutting interest rates in September.

The central bank has maintained its policy rate in the 5.25 per cent-5.50 per cent range since July, after raising its benchmark overnight interest rate by 525 basis points since March 2022.

Fuel prices played a major role in the April increase, with imported fuel costs rising 2.4 per cent after a 5.4 per cent jump in March.

The cost of imported food also went up, increasing by 1.7 per cent following a 1.6 per cent rise in March.

Excluding fuel and food, core import prices climbed by 0.6 per cent, a considerable increase from the 0.1 per cent rise seen in March.

Annually, core import prices grew by 0.4 per cent in April.

Other categories also saw price increases.

Imported capital goods prices edged up by 0.1 per cent last month, while the cost of motor vehicles, parts, and engines rose by 0.3 per cent.

Imported consumer goods prices saw a slight increase of 0.1 per cent.

These rising import prices indicate continued inflationary pressures within the US economy, challenging the Federal Reserve's efforts to stabilise prices without stalling economic growth.

(With inputs from Reuters)