The view inside a warehouse in Venice, Fla. U.S. businesses are dealing with higher input costs as a result of the war in Iran.Octavio Jones/Reuters
U.S. import prices increased by the most in nearly four years in February as energy costs surged in anticipation of conflict in the Middle East, adding to signs that inflation is poised to accelerate in the months ahead.
Import prices jumped 1.3 per cent last month, the largest increase since March, 2022, after an upwardly revised 0.6-per-cent gain in January, the Labor Department’s Bureau of Labor Statistics said on Wednesday.
Economists polled by Reuters had forecast import prices, which exclude tariffs, increasing 0.5 per cent after a previously reported 0.2-per-cent rise in January. In the 12 months through February, import prices advanced 1.3 per cent. That was the largest year-on-year increase since February, 2025, and followed a 0.3-per-cent increase in January.
“Having not been a factor in the inflation story recently, import prices are beginning to be an issue ahead of the surge in fuel prices that is to be expected in March with the conflict with Iran and the effective closure of the Strait of Hormuz,” said John Ryding, chief economic advisor at Brean Capital.
U.S. inflation held steady in February before Iran war sent energy costs soaring
The government last week reported that producer prices increased by the most in seven months in February, driven by broad increases in services and goods.
A survey from S&P Global on Tuesday showed businesses paid more for inputs in March and asked higher prices for their goods and services, blaming soaring energy costs and supply chain disruptions.
The U.S.-Israeli war with Iran has boosted oil prices by more than 30 per cent since the conflict started at the end of February. Fertilizer prices have also increased, which will feed through to higher food inflation. The strain from the war is on top of import tariffs, which businesses continue to gradually pass on to consumers. Imported fuel prices rebounded 3.8 per cent last month, the largest rise since April, 2024, after dropping 1.2 per cent in January. There were increases in the prices of petroleum and natural gas.
Food prices increased 0.8 per cent amid rises in a range of goods, including vegetables, distilled alcoholic beverages, meat and oilseeds. Excluding fuels and food, import prices shot up 1.2 per cent. The so-called core import prices rose 0.7 per cent in January.
U.S. consumer spending and core PCE inflation rise slightly in January
In the 12 months through February, core import prices jumped 3.0 per cent, partly reflecting prior dollar weakness against the currencies of the main U.S. trade partners. The trade-weighted dollar declined 1.6 per cent from the start of 2026 until the outbreak of the war in late February. It decreased 7.37 per cent in 2025. Prices for imported capital goods vaulted 1.3 per cent, the largest gain since the government started tracking the monthly series in 1988. That reflected higher prices for computers, peripherals and semiconductors as well as industrial and service machinery. These are likely related to an artificial intelligence spending boom by businesses.
Imported consumer goods excluding motor vehicles rose 0.5 per cent, driven by higher costs for apparel, footwear and household goods. Prices for motor vehicles, parts and engines climbed 0.2 per cent.
Economists are forecasting the core Personal Consumption Expenditures price index, one of the inflation measures tracked by the U.S. central bank for its 2-per-cent target, rose by 0.4 per cent in February, which would translate into a year-on-year increase of 3.0 per cent. Core PCE inflation increased 0.4 per cent in January and advanced 3.1 per cent year-on-year. The government will publish the delayed PCE inflation report for February next month.
The prices of goods imported from China increased 0.5 per cent in February, the largest advance since March, 2022, but dropped 1.9 per cent year-on-year. There were also increases in the prices of imports from Japan, the European Union and Canada. Prices for imports from Mexico fell 0.5 per cent.