Import prices are sky-high. Why?
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Why did import prices rise unexpectedly in February?
We'll do data today because sometimes you gotta. Batter up. It's opening day. And hey, how have you been sleeping? From American Public Media, this is Marketplace.
In Los Angeles, I'm Kyle Rizdahl. It is Wednesday today, 25 March. Good as it always is, everybody, to have you along. The data point of choice today is a tidbit from the Bureau of Labor Statistics called the U.S. Import and Export Price Indexes. It's the import side of that equation that's of most interest to us. In February... Those prices increased 1.3 percent. That's more than anybody had been guessing. And the biggest monthly increase since March of 2022. Year over year, the increase also 1.3 percent. Marketplace's Kristen Schwab gets us going with the why and the wherefore.
One funny thing about this data on import prices, says Oren Klatschken, an economist at Nationwide, is it shows the price of goods before businesses pay tariffs.
But all of the kind of secondary effects, if you will, all of the knock-on effects of tariffs, these are all visible in the data.
Businesses front-loaded inventory and shifted supply chains to avoid the highest taxes. And because of the uncertainty tariffs caused, the value of the dollar has fallen. These are all things that make imports more expensive. Then there's a seasonal quirk. We just had a really cold winter. Laura Veldkamp is an economist at Columbia University. She says demand for heating pushed fuel import prices up 3.8 percent from the month before. And that trickled down into the price of other imports. You might not think that oil was used in the production of an apple. But whether you're talking about a Honeycrisp from Canada or a Gala from New Zealand. We needed fuel to get that apple from the tree where it was grown into your supermarkets.
This is the part of the story where we acknowledge the big elephant in the room. This import price data is from before the war started. And the price of crude has been hanging out above $90 lately. Ishwar Prasad, a professor of trade policy at Cornell, warns February's increase in import prices isn't a one-off event.
This is a significant increase that is almost certain to be topped by even higher increases in the next month at least.
Higher import prices don't necessarily translate to higher prices at checkout. But Prasad says companies can't always absorb the costs.
More and more they have been passing them on to consumers.
Which would drive up inflation. Before the war, Klatchkin at Nationwide was thinking inflation would average out around 2.8 percent. Now?
We're looking for headline CPI inflation to average around 4.3% in the second quarter.
The hope is it's just a one-time jump in prices. I'm Kristen Schwab for Marketplace.
Ah, yes, that one-time jump in prices hope. Wall Street today, traders found somewhere in the back and forth about the war. Reason for hope? We'll have the details when we do the numbers.
Tariffs have been the macroeconomic through line the past year or so. Well, until three weeks ago, right? Now, though, speaking of three weeks ago, as small businesses watch energy and uncertainty take unwelcome turns, they've got a whole new set of worries. Christina Stembel is the CEO of Farm Girl Flour. She is our go-to in the direct-to-consumer flour business. Christina, welcome back. It's good to have you here.
Great to be here. Thanks for having me back.
So I went back and I looked it up. We had you on April the 28th of last year, which was just counting here, 26 days since President Trump's tariff palooza. And obviously we talked a lot about tariffs. How was the rest of 2025 for you?
Yeah. 2025 went well. Tariffs were tough, but just like everybody, we paid more. We had to pass some on. We absorbed some. But because of how we're running, we're just really focused on profitability.
How do tariffs impact the cost of imported goods?
We were able to get through.
How are you running? How's business sort of writ large?
Business is okay.
I think- Okay is not great. Usually you say, it's really good. My company's great. I love my company. And now you're like, oh, it's fine.
I love my company, so I love my team.
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