In August, the cost of imported goods experienced a significant increase of 0.5%, marking the largest surge in 15 months. This upward trend can largely be attributed to higher oil prices. Economists, who were surveyed by the Wall Street Journal, had initially estimated a more conservative 0.3% increase. However, when excluding fuel, import prices actually fell by 0.1% last month. Over the past year, the cost of imports has seen a 3% decrease after a substantial rise in prices during 2021 and 2022. Despite this recent increase, it is unlikely that inflation will return to pre-pandemic levels of 2% or less any time soon. Additionally, other indicators of U.S. inflation such as consumer and wholesale prices have also witnessed significant rises in August.
Within the realm of imported goods, the cost of foreign-produced fuel observed a sharp surge of 6.7% last month, following a 2.2% increase in July. On the other hand, prices for most other imports remained relatively stable, with industrial supplies and autos experiencing price decreases, while food and consumer goods saw slight increases. Nonfuel import prices have shown a decline of 0.8% over the past 12 months. In contrast, export prices demonstrated an uptick of 1.3% in August; however, over the past year, they have decreased by 5.5%.
The Big Picture
The recent spike in oil prices, which can be attributed to Saudi Arabian production cuts, has temporarily led to higher inflation rates in the United States. Prior to this surge in energy costs, inflation had been trending downwards.
In light of these developments, the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) are expected to open higher in Friday trades.