Imported goods become dearer in the U.S. for the seventh month in a row

The cost of imported goods in the U.S. rose for the seventh straight month in June indicating that inflation would persist as the domestic demand surges in the face of global supply chain restrictions.

On Thursday the Labor Department said the import price index jumped 1% in May, in line with Wall Street Journal’s analyst estimates. Import prices were reported as 11.2% year-on-year for June, compared to 11.6% in May which was the fastest since 2011.

The government reported the largest increase in the consumer price index (CPI) to 5.4% y-o-y, in 13 years, this month, while producer prices accelerated. On Wednesday, Federal Reserve Chairman Jerome Powell said that inflation “has increased notably and will likely remain elevated in coming months before moderating.”

He reiterated that prices will subside by next year as the economy returns closer to normal. 

The Fed stated that the price rise was due to the reopening of the economy which triggered a surge in demand. Increased COVID-19 vaccinations, low-interest rates, and the continuous government stimulus amounting to nearly $6 trillion since March 2020 have fueled demand. The global supply lines which have been disrupted by the pandemic, are strained, making it difficult for businesses to access enough supplies on time or at reasonable prices.

All imports excluding fuel climbed 0.7% in June as compared to the 0.9% rise in May. Imported fuel prices rose 4.7% in June as compared to 5.5% in May. The price index for petroleum was up at 4.6% after increasing 5.4% in May. The price index for nonfuel industrial supplies and materials rose 1.9% in June, following a 4.9% advance in May.

The report also mentioned that the export prices in June were up 1.2% compared to 2.2% in May. The export prices increased 16.8% y-o-y in June after surging 17.5% in May.

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