U.S. Import Prices Increase in October

WASHINGTON (Reuters) – U.S. import prices unexpectedly rose in October amid higher prices for fuels and other goods, indicating minimal progress in lowering inflation in recent months.

Import prices rebounded 0.3% last month following an unrevised decline of 0.4% in September, according to the Labor Department's Bureau of Labor Statistics on Friday. Economists polled by Reuters had forecast a drop of 0.1%. Over the 12 months leading to October, import prices increased 0.8% after a 0.1% dip in September.

Imported fuel prices rose 1.5% after two months of decline. Conversely, food prices fell 1.6%, marking a third consecutive month of decline. Excluding fuels and food, import prices gained 0.4% after a 0.3% rise in September. Core import prices increased 2.2% year-on-year in October.

Recent government data indicated that progress in lowering inflation back to its 2% target has effectively stalled. Consumer prices rose 0.2% for the fourth consecutive month in October, while producer prices also picked up 0.2%.

This, combined with anticipated tariffs on imported goods from President-elect Donald Trump's incoming administration, has led economists to believe that the Federal Reserve is unlikely to enact four interest rate cuts in 2025, as previously projected by policymakers in September.

Although a third rate cut is widely expected in December, some economists view this as uncertain. Fed Chair Jerome Powell stated, "the economy is not sending any signals that we need to be in a hurry to lower rates."

The Fed began its policy easing cycle with an unusually large half-percentage-point rate cut in September, marking its first reduction in borrowing costs since 2020. It had previously increased rates by 525 basis points in 2022 and 2023 to tackle inflation.