Inflation pressures are quietly rising, and U.S. import prices have seen the largest increase since 2022.

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U.S. import costs recorded the largest monthly increase in nearly four years in February, sharply raising market concerns about a resurgence of U.S. inflation and further narrowing the Fed's room for rate cuts.

Data released by the U.S. Department of Labor on Wednesday showed that import prices rose by 1.3% month-on-month in February, the largest monthly increase since March 2022. Rising oil and natural gas prices were the main drivers. During the same period, export prices surged by 1.5% month-on-month, marking the largest monthly gain since May 2022; year-on-year growth reached 3.5%, the highest level since September 2025.

The above data was collected before the outbreak of the Middle East conflict, which means the upward pressure on energy prices has yet to be reflected in the statistics. Market participants pointed out that as geopolitical risks continue to intensify, expectations for a shift in Fed policy will come under further pressure, and bets on a rate cut within 2026 have almost disappeared.

Import prices rise across the board, oil and Canadian goods are main drivers

The latest data from the U.S. Department of Labor shows that import prices rose month-on-month for the third consecutive month in February, with a year-on-year increase of 1.3%, the highest level since February 2025. Structurally, oil, minerals, and non-manufactured goods were the main contributors to this month's month-on-month import price rise, with non-manufactured goods from Canada particularly notable.

Excluding oil, import prices rose 1.2% month-on-month, also hitting a new high since January 2022, mainly driven by higher prices for consumer goods excluding capital goods and automobiles, indicating that price pressures have spread from energy to a broader range of goods.

Export prices surge simultaneously, industrial goods and fuels lead the way

Exports also showed strong growth. In February, export prices rose by 1.5% month-on-month, the largest monthly gain since May 2022. Year-on-year growth reached 3.5%, the highest level since September 2025.

From the breakdown, industrial goods as well as fuels and lubricants were the main factors driving the increase in export prices. The simultaneous sharp increase in import and export prices indicates that price pressures are not a one-way import, but are appearing at both ends of the supply chain.

Pre-war data intensifies inflation concerns, rate cut expectations further squeezed

Market interpretation of the above data is particularly sensitive because it was collected before the Middle East conflict erupted. Analysts believe that as geopolitical conflict gradually impacts energy and commodity supply chains, subsequent price data faces further upside risk.

Currently, market expectations for a Fed rate cut in 2026 have all but faded. The renewed rise in inflation expectations, coupled with slowing economic growth, has brought stagflation risks back into investors' sights and poses potential pressure on interest rate paths and cross-asset pricing.

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