U.S. import prices rose 0.8% in March, less than expected, suggesting the early impact of the Iran war was more limited than feared. Still, prices increased an average of 0.7% per month in Q1, the fastest pace since 2022, driven by a weaker dollar and strong demand for AI-related imports. Because import prices are measured before tariffs, the rise indicates foreign exporters are not lowering prices, leaving U.S. importers to absorb most of the tariff burden. Inflation risks remain elevated, which could delay Federal Reserve rate cuts.
Fuel import prices climbed 2.9% due to higher petroleum costs, while nonfuel prices rose 0.6%. Although slightly slower than earlier months, nonfuel import prices still posted their strongest quarterly gain since 2022, led by industrial supplies and capital goods.
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