Key facts
- U.S. import prices rose 1.9% in May, exceeding forecasts.
- The annual increase in import prices was 6.7%, the largest since August 2022.
- Imported fuel prices rose 12.5% and imported capital goods prices increased 1.3% in May.
- U.S. retail sales increased 0.9% in May, beating expectations.
- Gasoline prices contributed to retail sales growth, having surged to four-year highs.
- The Federal Reserve is expected to hold interest rates steady.
U.S. import prices rose 1.9% in May, significantly exceeding economists' expectations and marking the largest annual increase in nearly four years. This surge, driven by a 12.5% jump in imported fuel prices and a 1.3% rise in imported capital goods, signals persistent inflationary pressures.
Concurrently, U.S. retail sales increased by a stronger-than-anticipated 0.9% in May. This growth was partly fueled by higher gasoline prices, which had reached four-year highs amid geopolitical tensions involving Iran, and was also supported by tax refunds and a stock market rally that depleted savings.
The Federal Reserve is expected to maintain its benchmark interest rate between 3.50% and 3.75% at its upcoming meeting. While inflation remains a concern, economists do not anticipate policy tightening this year, especially with easing oil prices.