US Import Prices Rise More Than Expected in September

what happened

US import prices rose 1.1% in September from the previous month, the Bureau of Labor Statistics reported on Friday. Economists polled by Reuters had expected a 0.8% gain, while Seeking Alpha cited a consensus of 0.6%. August's figure was revised to 0.5% from a previously reported 0.7%.

Over the 12 months through September, import prices climbed 8.1%, the fastest pace since July 2022, after a 6.7% rise in August. Higher costs for energy products and a broad range of other goods drove the increase as the Middle East conflict persists. The ongoing US-Israeli war with Iran has disrupted supply chains and kept oil prices elevated.

The government earlier this week reported strong gains in consumer and producer prices, leading economists to conclude that inflation is spreading beyond the energy sector. Markets still expect the Federal Reserve to hold off on a rate hike later this month but tighten policy in December. The central bank raised its benchmark rate by 25 basis points in September, to the 3.75%-4.00% range.

why it matters

For markets this is an unwelcome signal, as broadening inflation narrows the room for the Fed to ease policy. Rate expectations remain sensitive to each new price report, and oil prices still depend on how the Middle East conflict develops.

market impact

USD and US Treasuries: stronger inflation shifts expectations for Fed rates, pressuring bonds and supporting the dollar

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