Import prices rise for second month in a row and add to U.S. inflation

By Jeffry Bartash

Import price index increases 0.3% in February

The numbers: The cost of imported goods rose in February for the second month in a row and added to a small upturn in U.S. inflation early in the new year.

The import price index advanced 0.3% last month after a 0.8% gain in January. The increase matched the Wall Street forecast.

Import prices minus fuel rose a slightly smaller 0.2% in February, the government said.

Until the past few months, the cost of imported goods had fallen steadily and contributed to lower U.S. inflation. Import prices fell in the final three months of 2023, helped by lower oil prices.

Now the trend appears to be unwinding, especially with oil prices creeping higher.

Meanwhile, a pair of inflation reports published earlier this week showed U.S. wholesale and consumer prices rose in February more than predicted. That's raised questions about when the Federal Reserve will begin to cut interest rates.

Key details: The back-to-back increase in import prices was the first since last summer. The cost of most imports, including fuel, rose in February.

Import prices are still 0.8% lower than they were a year ago, but they were declining at a 6% yearly rate as recently as last June.

Cheaper import prices help to lower U.S. inflation because Americans buy so many foreign-made products such as oil, cars and consumer electronics. Higher import prices make U.S. inflation worse.

Big picture: The cost of imports aside from oil usually doesn't play a big role in U.S. inflation, but the general price trend recently has been less positive than it was at the end of 2023.

The Fed is primed to cut interest rates later this year if inflation slows a bit more toward its 2% target, but the most recent batch of price increases raises the odds that rate cuts might not take place until the summer or later.

Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX were set to open mixed in Friday trading, leaving them near a record high.

-Jeffry Bartash

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03-15-24 0925ET

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