Fueling fears that inflation is heating up: Americans paid a lot more for imported goods in March.
The Labor Department reported Wednesday that import prices rose for the fifth straight month by 1.2%. On a year-on-year basis, they jumped 6.9%. That’s the fastest pace since January 2012.
The report comes on the heels of data this month showing a surge in prices at the wholesale and consumer levels. Increased vaccinations and massive fiscal stimulus are unleashing pent-up demand.
Federal Reserve Chair Jerome Powell and many economists view higher inflation as temporary, but O’Neil Global Advisors Chief Investment Officer Randy Watts is very concerned:
“I do think it's going to eventually be a problem, and the reason it's going to be a problem is as we reopen the country, there's a lot of spending that's going to come out. Consumers have got like 1.6 trillion in pent up spending, which they developed during the pandemic, as no one was going out and spending money. In addition, we have all the stimulus money coming from that Biden bill.”
Higher costs for petroleum products and tight supply chains are driving prices higher. Imported fuel prices rose 6.3% last month; food shot up 2%.
The report also showed that export prices rose more than 2%, fueled by higher prices for agricultural products and industrial supplies and materials.