US import prices rise 1.1% in September, pressuring import-dependent businesses

US import prices rose 1.1% in September from the previous month, up from a 0.5% increase in August and more than expected, according to reports citing the Bureau of Labor Statistics. ^[1][2] The measure tracks prices paid for goods bought from abroad, rather than the final retail prices consumers pay.

Higher prices for energy products and a range of other goods drove the increase, with the report noting that the Middle East conflict persists.^[2]

Higher import prices first reach businesses through purchasing costs. Companies buying foreign goods, components or fuel may pay more as they replenish inventory or renegotiate prices. Costs they cannot pass on squeeze margins; costs they pass to customers can raise prices further down the supply chain. Because the increase extended beyond energy, the pressure is not confined to fuel users.^[2]

If that pressure persists and reaches consumer prices, it could limit the Federal Reserve’s room to cut interest rates and make business borrowing costs harder to bring down. Treasury yields did not rise on the day, however: on October 16, the two-year yield fell to 4.74% from 4.77% the previous session, while the 10-year slipped to 5.09% from 5.10%. This release alone does not establish that markets repriced rates higher.

Impact

What to watch next

• October 23: S&P Global’s October manufacturing and services purchasing managers’ indexes (PMIs). Survey signals on input costs and selling prices would help test whether import-price pressure is spreading across businesses.