By Lucia Mutikani
WASHINGTON (Reuters) - U.S. import prices increased more than expected in March, lifted by higher costs for petroleum products and tight supply chains, the latest sign of inflation heating up as the economy reopens.
The report from the Labor Department on Wednesday followed on the heels of data this month showing a surge in producer and consumer prices in March. Increased COVID-19 vaccinations and massive fiscal stimulus are allowing more services businesses to resume operations, unleashing pent-up demand, which is running up against supply constraints.
Federal Reserve Chair Jerome Powell and many economists view higher inflation as transitory, with supply chains expected to adapt and become more efficient.
"Soaring commodity prices and strong base effects will continue to boost import prices in the coming months," said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics in New York.
"However, the acceleration in import inflation should be temporary and trend lower in the second half of the year."
Import prices rose 1.2% last month after advancing 1.3% in February. The fifth straight monthly gain lifted the year-on-year increase to 6.9%, the largest rise since January 2012. Import prices rose 3.1% on a year-on-year basis in February.
Part of the jump in the year-on-year prices reflected the dropping of last spring's weak readings from the calculation.
Economists polled by Reuters had forecast import prices, which exclude tariffs, would increase 1.0%.
Imported fuel prices rose 6.3% last month after accelerating 11.7% in February. Petroleum prices gained 6.7%, while the cost of imported food shot up 2.0%.
Excluding fuel and food, import prices jumped 0.8%. These so-called core import prices rose 0.3% in February.
Last month, the cost of goods imported from China increased 0.4% after rising 1.1% from November to February. Prices for imported capital goods soared 1.8%.
The cost of imported capital goods edged up 0.1%. Imported motor vehicle prices were unchanged. Prices for consumer goods excluding autos ticked up 0.1%.
The report also showed export prices vaulted 2.1% in March after gaining 1.6% in February. Prices for agricultural exports rose 2.4%, boosted by higher prices for meat, soybeans, fruit, and cotton. Nonagricultural export prices increased 2.0%, lifted by industrial supplies and materials, consumer goods, capital goods and nonagricultural foods.
Export prices surged 9.1% on a year-on-year basis in March, the largest rise since September 2011, after increasing 5.3% in February.