The price of imported goods rose in February, signaling inflation even before the war

The latest U.S. Import and Export Price Indexes summary from the Bureau of Labor Statistics came out on Wednesday morning. In February, import prices increased 1.3%.

That’s higher than what was expected — and the largest monthly increase since March 2022. What’s behind the price boost, and what does it mean for inflation?

One funny thing about this data on import prices is it shows the price of goods before tariffs, said Oren Klachkin, an economist at Nationwide.

“But all of the kind of, you know, secondary effects, if you will, all of the knock-on effects of tariffs, these are all visible in the data,” Klachkin said.

Businesses frontloaded inventory and shifted supply chains to avoid the highest taxes. And because of uncertainty tariffs caused, the value of the dollar has fallen. These are all things that make imports more expensive.

Then there’s a seasonal quirk.

“We just had a really cold winter,” said Laura Veldkamp, an economist at Columbia University.

She said demand for heating pushed fuel import prices up 3.8% from the month before, and that trickled down into the price of other imports.

“You might not think that oil was used in the production of an apple,” Veldkamp said. But whether you’re talking about a Honeycrisp from Canada or a Gala from New Zealand, “we needed fuel to get that apple from the tree where it was grown into your supermarket.”

This is the part of the story where we acknowledge the big elephant in the room: This import price data is from before the war started. And the price of crude has been hanging out above $90 lately.

February’s increase in import prices isn’t a one-off event, warned Eswar Prasad, a professor of trade policy at Cornell University.

“This is a significant increase that is almost certain to be topped by even higher increases in the next month at least,” Prasad said.

Higher import prices don’t necessarily translate to higher prices at checkout. But Prasad said companies can’t always absorb the costs.

“More and more they have been passing them onto consumers,” he said.

Which would drive up inflation.

Before the war, Oren Klachkin at Nationwide was thinking inflation would average out around 2.8%. Now?

“We’re looking for headline CPI inflation to average around 4.3% in the second quarter,” Klachkin said.

The hope is it’s just a one-time jump in prices.