US import prices jump 8.1% as Iran war fuels inflation ahead of midterms

US import prices rose more than expected in September, climbing 8.1% from a year earlier to record their largest annual increase since July 2022. Higher energy costs and rising prices across a range of imported goods are adding to inflation pressures as the Iran war continues to disrupt supply chains, putting the cost of living back in focus ahead of the US midterm elections.

Data released by the US Bureau of Labor Statistics (BLS) on October 16 showed that import prices increased 1.1% in September after a revised 0.5% rise in August.

Economists polled by Reuters had expected a monthly increase of 0.8%.

The latest figures follow increases in consumer and producer prices, strengthening concerns that inflation is spreading beyond energy.

The persistent rise in prices also complicates the Federal Reserve’s efforts to bring inflation back towards its 2% target.

The economic pressure comes as President Donald Trump faces growing scrutiny over affordability ahead of the November midterm elections.

Economists have pointed to elevated energy prices, supply chain disruption, and the administration’s trade policies as factors contributing to higher costs.

“Americans face an inflation threat literally on every front, and everywhere they turn they have to reach in their pocketbooks and pay a little bit more for the same goods that were cheaper just a few months ago,” said Christopher Rupkey, chief economist at FWDBONDS.

Rupkey argued that import-price pressures had become more widespread since the rollout of Trump’s second-term economic policies in January 2025.

Imported fuel prices rebounded 4.8% in September after declining 0.2% in August. The increase reflects the pressure that elevated energy costs can place on businesses, transport operators, and consumers, particularly when geopolitical tensions disrupt oil supplies and shipping routes.

Food import prices were unchanged during the month after falling 0.6% in August. However, prices excluding food and fuel rose 0.7%, matching August’s increase. These underlying import prices climbed 6.2% over the 12 months through September.

Capital goods prices increased 0.9% for a second consecutive month, supported by higher prices for computers, peripherals, and semiconductors amid heavy investment in artificial intelligence infrastructure.

Prices for imported consumer goods, excluding automobiles, rose 0.4%, while imported vehicles, parts, and engines became 0.3% pricier. The figures point to price pressures across several categories of goods rather than energy alone.

Import prices from China increased 0.7% in September, their largest monthly rise since December 2021. Over the year, prices for Chinese imports advanced 3.1%. Prices also increased for imports from several other major trading partners, including Japan, Mexico, and Canada.

The figures arrive amid continuing debate over the effects of Trump’s tariffs on American businesses and households. However, the BLS import-price index excludes tariffs, meaning the latest increase does not directly measure the cost of those duties. Tariffs can still raise the prices paid by US importers and consumers through separate channels.

The latest import-price data add to the challenge facing the Federal Reserve as policymakers weigh persistent inflation against the risks of slowing economic growth.

The central bank raised its benchmark interest rate by 25 basis points in September, taking the target range to 3.75%-4.00%. Markets were still expecting policymakers to hold rates steady at the October meeting, with the possibility of further tightening later in the year remaining a concern.

Economists are also watching the core personal consumption expenditures (PCE) price index, the Fed’s preferred inflation measure.

Estimates cited by economists put September’s monthly core PCE increase between 0.31% and 0.36%, potentially rounding to 0.4%. That would translate into an annual increase of about 3.1%, compared with 3.0% in August.

“We’re looking for inflation to accelerate in the near term but not plateau at a higher level,” said Oren Klachkin, financial markets economist at Nationwide.

He warned, however, that inflation could remain elevated for longer than expected, making it more difficult for the Fed to bring price growth under control.

There were some positive signals from US manufacturing, although the broader picture remained mixed.

Federal Reserve estimates showed factory production rebounded 0.3% in September after declining 0.2% in August.

Businesses replenishing inventories to meet domestic demand helped support the recovery.

Manufacturing nevertheless lost momentum during the third quarter. Factory output grew at an annualised rate of 0.7%, down sharply from 5.6% in the second quarter.

Semiconductor and related electronic-component production surged 28.4% during the third quarter, reflecting the strength of demand associated with the AI investment boom.

By contrast, motor vehicle and parts production fell 3.0% in September and contracted at a 3.4% annualised rate over the quarter.

Higher energy and transportation costs remain a risk for manufacturers and retailers, potentially feeding through to the prices consumers pay for everyday goods.

Rising borrowing costs and uncertainty surrounding trade policy could also weigh on investment and production.

With affordability emerging as a key political issue before the midterms, the September import-price figures add to concerns about the US inflation outlook.

Whether the latest increases persist will depend partly on energy prices, supply chain conditions, domestic demand, and the extent to which businesses pass higher costs on to consumers.