In a sign that inflation may be returning, April’s import prices rose by 4.1% in the United States according to the labor department. Non-petroleum based imports rose by 1.1% versus the prior year, showing the strongest growth since 2012.
That level of inflation is not enough to cause serious concerns among economists and policymakers, but it does show that the nascent inflation rate is starting to pick up steam as labor markets tighten and the dollar gets weaker. Export prices also rose, by about 3% from the prior year.
The overall rate of inflation, as measured by the PCE deflator, is running at 1.8% annually, just slightly below the Federal Reserve’s target of 2%. Combined with a historically low unemployment rate, it seems increasingly certain that the Fed will continue tightening monetary policy throughout the remainder of the year.
Economists had forecast an increase in import prices of just 0.2%.