U.S. Import Prices Jump 1.9% in May, Fastest Annual Rise in Nearly 4 Years, Fueled by War and AI Demand

U.S. import prices surged 1.9% in May, matching April’s gain, driven by soaring costs for plastics, air travel, and computer equipment, the Bureau of Labor Statistics reported June 16. The annual increase hit 6.7%, the steepest rise in nearly four years, as inflation pressures from the Iran war and AI-driven demand intensified. Imported plastic materials, critical inputs for consumer goods derived from fossil fuel byproducts, spiked 6.5%—one of the largest monthly jumps on record. Air passenger fares also climbed sharply, while imported computer, peripheral, and semiconductor prices rose 3.6%, the second-biggest monthly advance since 1994. The AI boom is inflating costs beyond high-end manufacturing, embedding chips into everything from phones and computers to cars. The data underscores the widening economic toll of the Iran war, with consumer and producer prices rising sharply in recent months. A potential U.S.-Iran peace deal expected June 19 has sent oil prices tumbling and stocks surging, leading economists to suggest the worst of inflation may be over. However, the Federal Reserve remains cautious, with policymakers widely expected to hold interest rates steady at their June 17 meeting but traders pricing in a potential hike by year-end.