Analysis
Import Prices Are Up 8.1% in a Year, the Most Since 2022, on a Day Factory Output Beat Forecasts
US import prices rose 1.1% in September against 0.8% expected, the Bureau of Labor Statistics said on October 16, the fastest imported inflation since 2022 with fuel up 34.5% from a year earlier. Industrial production rose 0.7%, almost double the forecast, and capacity utilization reached 76.9%, the Federal Reserve reported.
The week's last two economic releases told the same story as the first four: prices are rising faster than expected and output is holding up. Import prices rose 1.1% in September after a 0.5% gain in August, revised down from 0.7%, against a consensus of 0.8%. Over twelve months they are up 8.1%, the largest annual increase since the 8.8% recorded in the year to July 2022. Fuel imports rose 4.8% in the month, with petroleum up 4.6% and natural gas 1.6%, and are 34.5% higher than a year ago. Prices excluding fuel rose 0.7% in September and 6.0% over the year, the most since April 2022. Export prices jumped 2.2% after a 1.2% gain in August.
Forty-five minutes later the Federal Reserve reported that industrial production rose 0.7% in September, against a forecast of 0.4%, after a revised 0.1% gain in August. Manufacturing output rose 0.3%, mining 0.2% and utilities 3.5%. Capacity utilization climbed to 76.9% from 76.4%, still 2.5 percentage points below its 1972 to 2025 average. For the third quarter as a whole, output grew at a 2.8% annual rate and was 2.2% above its level a year earlier.
Put the week together: consumer prices up 3.7% from a year earlier, producer prices up 1.3% in a single month, retail sales up 0.8% with 71% of the gain at gasoline stations, a 25.5 reading on the New York Fed's factory survey and now import prices at a four-year high. The common factor is energy. The BLS import indexes exclude tariffs and shipping, so they understate what an importer actually pays; what they capture is oil, and oil closed the week above $100.
The Fed goes quiet from Saturday, when the communications blackout before the October 28 meeting begins. Chair Kevin Warsh's last word, from the IMF meetings in Bangkok on Friday, was that he would not say in advance what he might do. Futures prices cited by CNBC put the chance of no change at the meeting at about 72%, which leaves the odds of a second hike under 30%, down from about 50% immediately after Wednesday's CPI report. The 10-year Treasury yield closed at 5.10%, almost unchanged on the day and lower on the week.
Next week is quieter for data: housing starts on Tuesday, jobless claims on Thursday and the final October reading of consumer sentiment on Friday, which includes households' inflation expectations. The earnings calendar does the talking instead.