MW Inflation watch: High oil prices boost the cost of imports again. How long will the pain last?

By Jeffry Bartash

Flat import prices minus energy offer some hope

Countries are flocking to North America to obtain oil amid the ongoing U.S. conflict with Iran.

The cost of imported goods rose sharply in March for the third month in a row, heralding further increases in U.S. inflation at least for the next few months, mostly due to higher oil prices.

Import prices rose 0.8% last month, the government said Wednesday.

The cost of imports rose at a nearly 10% annual rate in the first quarter, the largest increase in almost four years.

A spike in oil prices tied to the Iran war was the biggest culprit, as expected.

If there was a silver lining, it was that import prices excluding petroleum rose a scant 0.1% in March. That's the smallest increase since early last fall.

What's unclear is whether the slowdown in nonenergy import prices can last.

Prices surged early this year for capital goods. These are things such as tools, machines and large computers used by businesses to produce other products such as data centers or factories.

High demand for artificial intelligence is one of the key drivers.

Economists predict the current wave of inflation is likely to peter out later in the year, but they are uncertain as to when and by how much.

The immediate impact of higher oil prices and rising inflation is to raise the cost of filling up at the gas pump or traveling by plane. That has put households under further financial strain.

Oil prices have subsided in the last few weeks, but they are still 40% higher than before the Iran war began.

The Federal Reserve, for its part, is unlikely to cut interest rates soon, with inflation rising instead of falling.

Just three months ago, Wall Street was hoping the Fed would cut borrowing costs a few times this year to drive down interest rates on mortgages, car loans and other big-ticket items.

Instead, a prolonged slump in the housing market is likely to be extended, given the high cost of buying a home.

Key details: The cost of imported fuel shot up 2.9% in March after a 2.4% advance in February.

Prices also rose for food, beverages, industrial supplies and, to a lesser extent, consumer goods.

The cost of U.S. exports, meanwhile, leaped by 1.6% in March.

American oil producers on the Gulf Coast have reaped a bonanza from the choking off of energy supplies moving through the key Strait of Hormuz near Iran. Oil tankers are flocking to the U.S. to obtain badly needed supplies.

The inflow of money to the U.S. oil industry could partly offset some of the damage to the economy from higher gas prices.

U.S. farmers also appear to be benefiting from higher prices for soybeans and other agricultural products.

Big picture: The rate of U.S. inflation, using the Fed's preferred PCE price index, is on track to rise to 3.4% in March from 2.8% in the prior month when the report is published in two weeks.

The last time inflation was that high was in the fall of 2023. What's more, the increase in March would push the rate of inflation way above the Fed's 2.0% target.

Before the year began, the Fed was expecting inflation to slow to 2.4% by the end of 2026. Now that target is in grave doubt, limiting the flexibility of the Fed to lower interest rates.

Economists say it's possible inflation could stay above 3% for the full year, depending on how soon oil prices return to preconflict levels.

Market reaction: The Dow Jones Industrial Average DJIA and the S&P 500 SPX were set to open slightly higher in Wednesday trading.

-Jeffry Bartash

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April 15, 2026 09:55 ET (13:55 GMT)

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