Import prices come in hotter than expected with an increase of 0.4 percent on the month in July, which tops the expected 0.1 percent increase. That is another worrisome sign for markets already in a dither over the impact of rising import prices on inflation. That worry has been aggravated by the shocking 0.9 percent producer price increase reported for July. The downward revision in import prices for June to minus 0.1 percent from an increase of 0.1 percent previously reported mitigates the July news somewhat.

A big part of the July increase in import prices reflects a 2.7 percent jump in prices for import fuel after an increase of 0.8 percent in June and a decrease of 5.0 percent in May. The July increase was the largest one-month rise since imported fuel prices rose 3.0 percent in January 2025.

Additional upward impetus for import prices comes from nonfuel imports, up 0.3 percent in July following a decrease of 0.3 percent in June. Rising prices on the month for industrial supplies and materials, consumer goods, and capital goods more than offset lower prices for automotive vehicles and foods, feeds, and beverages, the Labor Department says. Nonfuel import prices are up 0.9 percent for the year ended in July and have not fallen on a yearly basis since a 0.6-percent decrease in February 2024.

Import prices expected up 0.1 percent on the month and down 0.2 percent on year. Export prices seen up 0.1 percent on the month too.

Import price indexes are compiled for the prices of goods that are bought in the United States but produced abroad and export price indexes are compiled for the prices of goods sold abroad but produced domestically. These prices, which exclude tariffs and taxes, measure underlying inflationary trends in internationally traded products.

Changes in import and export prices are a valuable gauge of inflation here and abroad. Furthermore, the data can directly impact the financial markets such as bonds and the dollar. The bond market is especially sensitive to the risk of importing inflation because it erodes the value of the principal (the original investment) which is paid back when the bond matures. It also decreases the value of the steady stream of interest rate payments on this type of security. Inflation leads to higher interest rates and that's bad news for stocks, as well. By monitoring inflation gauges such as import prices, investors can keep an eye on this menace to their portfolios.