In another sign that inflation could be on the rise across the US, import prices registered a stronger than forecast increase during the month of March, as fuel costs rose and supply chains tightened owing to the pandemic. Data released by the US Labor Department revealed that import prices were up by 6.9% YoY in March – the steepest increase seen in over nine years.

During February, import prices had increased by 3.1% on an annual basis, while economists had forecast an increase by 1% instead. The higher reading for March was driven by weaker readings during March 2020 as the pandemic struck the US and forced it into lockdown mode.

Prices of fuel imports increased by 6.3% in March, easing down from February’s 11.7% rise. Meanwhile, the prices of food imports rose by 2%. The core import prices which exclude volatile fuel and food prices were up by 0.8% in March, higher than the 0.3% increase seen in the previous month.

The higher readings support markets’ expectations for a rise in inflation as the US rebounds from the coronavirus crisis. However, analysts expect the spike to be temporary and ease lower by H2 2021 as the global economy begins to emerge out of the downturn and supply chains around the world function more smoothly.

On an encouraging note, export prices also registered a stronger increase, rising by 2.1% in March following a 1.6% increase in February. Higher prices of food products drove agricultural export prices up by 2.4% while export prices for non-agricultural goods increased by 2%.