U.S. import prices recorded their sharpest increase in nearly four years in February, climbing 1.3% amid a surge in energy costs tied to escalating tensions in the Middle East. The rise, reported by the Labor Department’s Bureau of Labor Statistics, exceeded economists’ expectations of a 0.5% gain and followed a revised 0.6% increase in January. On a year-on-year basis, import prices advanced 1.3%, marking the biggest annual rise since February 2025 and reinforcing concerns that inflationary pressures are beginning to build again.
The spike was largely driven by higher fuel costs, with imported fuel prices jumping 3.8%—the biggest increase since April 2024—alongside gains in petroleum and natural gas. Food prices also rose 0.8%, reflecting increases across vegetables, meat, oilseeds, and beverages. Excluding food and fuel, core import prices climbed 1.2% in February and were up 3.0% from a year earlier, partly due to a weaker U.S. dollar. Economists warn that rising oil prices, fueled by the U.S.-Israeli conflict with Iran and disruptions in key supply routes like the Strait of Hormuz, could further intensify inflation in the coming months.
Broader price pressures are also emerging across sectors, with capital goods import prices surging 1.3%—the largest increase since records began in 1988—driven by higher costs for technology and industrial equipment amid growing AI-related investments. Consumer goods prices, excluding vehicles, rose 0.5%, while motor vehicle prices edged up 0.2%. With producer prices also rising and businesses reporting higher input costs, economists expect the core Personal Consumption Expenditures (PCE) price index to increase 0.4% in February, keeping annual inflation elevated at around 3%, above the Federal Reserve’s 2% target.
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