WASHINGTON, June 16 (Reuters) - U.S. import prices rose more than expected in May amid strong gains in the prices of fuels and capital goods, leading to the largest annual increase in nearly four years.
Import prices increased 1.9% last month after an upwardly revised 2.0% jump in April, the Labor Department's Bureau of Labor Statistics said on Tuesday. Economists polled by Reuters had forecast import prices, which exclude tariffs, rising 1.0% after a previously reported 1.9% surge in April.
In the 12 months through May, import prices advanced 6.7%. That reading was the largest year-on-year increase since August 2022 and followed a 4.2% rise in April.
Oil prices have soared amid the U.S.-Israeli war with Iran, fanning inflation. Washington and Tehran said on Sunday they had agreed terms to end the war and reopen the Strait of Hormuz, though the pact may hinge on an end to hostilities in Lebanon.
Consumer inflation increased at its fastest pace in three years in May, while producer prices posted their largest gain in 3-1/2 years, the government reported last week.
Rising inflation and labor market stability have raised the chances of an interest rate increase from the Federal Reserve. Economists, however, viewed the bar as high for policy tightening.
U.S. central bank officials were due to start their two-day policy meeting on Tuesday. They were expected to keep the Fed's benchmark overnight interest rate in the 3.50%-3.75% range, but pivot away from an easing bias, economists predicted.
Prices of imported fuel increased 12.5% last month after shooting up 18.6% in April. Imported capital goods rose 1.3%. An artificial intelligence spending spree is pushing up imported capital goods prices.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama
