MW Higher inflation is coming - import prices show biggest increase in four years
By Jeffry Bartash
Imported goods post their biggest price gain since 2022
The Iran war is likely to lead to higher inflation around the world.
Wall Street was already worried about another surge in inflation tied to the Iran war. Now a stunningly large increase in the cost of imported goods has added to the angst.
Import prices leaped 1.3% in February to mark the biggest advance in almost four years. The increase was almost double the Wall Street DJIA SPX forecast.
The rise in import prices over the past year also moved up to a one-year high.
As is often the case, oil and natural gas played a role. Prices of imported energy climbed almost 3% last month, breaking a streak of six straight monthly declines.
The odd thing is, energy prices rose even though the cost of oil was very stable in February, at $62 to $65 a barrel. Oil prices didn't begin to soar until early March, after the Iran conflict was a few days old.
Yet higher energy costs were not the only reason - or even the main reason - for the increase. Import prices rose across the board: food, grains, metals, paper, plastics, rubber, computer chips and electronics.
Prices of imports excluding energy shot up 1.1% in February, also the largest gain in almost four years.
By itself, a big increase in import prices might not be a big deal - they rise and fall by large amounts quite often. Yet the increase came just before the Iran war sent the global cost of oil, fertilizer and other key materials surging.
Economists predict the U.S. will see a big increase in inflation in March and beyond, depending on how long the conflict lasts.
The rate of U.S. inflation could soon top 3% and push the Federal Reserve further away from its 2% target, forestalling additional reductions in interest rates.
"The fact that non-fuel import prices increased so much is a wake-up call for policymakers and will keep the Federal Reserve in pause for longer than expected," said Eugenio Aleman, chief economist at Raymond James.
Economists were not entirely certain why import prices rose so much in February.
Importers could be trying to pass along price increases to offset their own higher costs, for one thing. Last year they may have kept prices down so as not to lose market share in the U.S., economists say.
High U.S. tariffs might have played a role, but not a direct one. The government calculates changes in import prices before tariffs are imposed.
Another factor appeared to be rising semiconductor prices from Asian producers such as Taiwan and South Korea, reflecting a surge in global demand as businesses deploy artificial intelligence.
A weaker dollar could also play a part. U.S. companies procuring foreign goods and supplies have to pay more when the domestic currency is worth less.
Add it all up and the February spike in import prices might be a sign of things to come.
"Risks are tilted toward higher import prices in 2026 thanks to higher global oil prices due to the U.S.-Iran war, strong demand for capital goods imports, and past depreciation in the dollar," U.S. economist Grace Zwemmer of Oxford Economics wrote in a research note.
-Jeffry Bartash
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 25, 2026 11:00 ET (15:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments