US import prices increased by the most in nearly two years in January amid rising costs for petroleum and other goods, a trend that, if sustained, would be bad news in the fight against inflation.

Import prices jumped 0.8 per cent last month, the largest gain since March 2022, after a revised 0.7 per cent decline in December, the Labor Department’s Bureau of Labor Statistics said on Thursday (Feb 15).

Import prices were previously reported to have been unchanged in December. Economists polled by Reuters had forecast import prices, which exclude tariffs, would be unchanged in January.

In the 12 months through January, import prices fell 1.3 per cent after decreasing 2.4 per cent in December. Annual import prices have now dropped for 12 consecutive months, though the pace of decline is slowing. Government data this week showed that consumer prices picked up in January, driven by higher rental costs as well as price increases at the start of the year.

Financial markets have pushed back their interest rate-cut expectations to June from May. Since March 2022, the Federal Reserve has raised its policy rate by 525 basis points to the current 5.25 per cent to 5.50 per cent range.

Imported fuel prices rebounded 1.2 per cent in January. That followed a 7.7 per cent plunge in December. The cost of imported food surged 1.5 per cent after dipping 0.1 per cent in the prior month.

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Excluding fuels and food, import prices rose 0.7 per cent after being unchanged in December. These so-called core import prices fell 0.6 per cent on a year-on-year basis in January.

Prices for imported capital goods rose 0.4 per cent last month after slipping 0.1 per cent in December. The cost of motor vehicles, parts and engines jumped 0.8 per cent after rising 0.1 per cent in the prior month.

Consumer goods excluding automotives soared 1.1 per cent. Prices of goods imported from China fell 0.3 per cent. They dropped 2.9 per cent on a year-on-year basis in January.

The report also showed export prices rebounded 0.8 per cent after declining 0.7 per cent in December. Export prices fell 2.4 per cent on a year-on-year basis in January, after decreasing 2.9 per cent in December. REUTERS