(June 16): US import prices surged in May amid soaring costs of computer equipment, plastics and air travel, the latest evidence of the inflationary impact of the Iran war and the data centre boom.
The import price index rose 1.9% last month after a similar advance in April, Bureau of Labor Statistics data showed Tuesday. From a year ago, it increased 6.7%, marking the fastest pace in almost four years.
Prices of imported plastic materials — key inputs into a vast array of consumer goods that are generated from byproducts of fossil fuels — jumped 6.5% in one of the biggest monthly advances on record. Import air passenger fares, a category that feeds directly into the Federal Reserve’s preferred inflation gauge, also surged.
Meanwhile imported computer, peripheral and semiconductor prices rose 3.6% in May, the second-biggest advance in monthly data going back to 1994. The artificial intelligence rush is stoking inflation beyond high-level manufacturing, as chips are embedded in all kinds of consumer goods from phones and computers and cars.
Tuesday’s report is the latest in a series of data releases highlighting the toll the Iran war is taking on the US economy. Consumer and producer prices have risen substantially in recent months as inflation pressures start to spread beyond the initial oil shock.
See also: US jobless claims edge down in sign of job market resilience
The US and Iran are expected to sign an interim peace deal Friday, which has sent oil prices tumbling and stocks soaring. Economists say the worst of the inflation is likely now in the rear-view mirror, though prices could continue to rise as the impact works its way through supply chains.
The Fed is closely tracking the impact the war is having on prices. While policymakers are widely expected to hold interest rates unchanged at the end of their two-day meeting Wednesday, traders now see them raising borrowing costs by the end of the year.
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