US import prices continued to rise sharply in May, indicating that energy cost increases triggered by the Middle East conflict and the data center construction boom driven by artificial intelligence (AI) are persistently transmitting inflationary pressures into the US economy.
Data released by the US Bureau of Labor Statistics on Tuesday showed that the US import price index rose by 1.9% month-on-month in May, matching the revised increase from April. On an annual basis, import prices increased by 6.7%, marking the largest rise in nearly four years.
Looking at specific categories, plastic raw materials, computer equipment, and international air freight prices were the main factors driving up import costs. The data shows that the price of imported plastic raw materials surged by 6.5% month-on-month in May, one of the largest single-month increases on record. As plastic products are widely used in packaging, home appliances, automobiles, and the manufacturing of daily consumer goods, and their raw materials are highly dependent on petrochemical products, rising energy prices are gradually being transmitted through the industrial chain to a broader range of consumer sectors.
At the same time, imported air passenger fares also saw a significant increase. This item is considered one of the key inflation indicators closely monitored by the Federal Reserve and directly affects its preferred inflation measure, the Personal Consumption Expenditures (PCE) price index.
Notably, the demand surge brought by the AI industry is also pushing up prices for some imported goods. Data indicates that prices for imported computers, peripheral equipment, and semiconductor products rose by 3.6% month-on-month in May, the second-largest single-month increase since related statistics began in 1994. As global AI infrastructure construction enters a peak period, large-scale data center construction continues to drive up demand for servers, chips, and related electronic equipment.
Meanwhile, chips are already widely used in consumer products such as smartphones, personal computers, and automobiles, meaning the cost pressures from the AI boom are gradually spreading from high-end manufacturing to broader sectors.
This data is the latest in a recent series of evidence showing the expanding effects of war-related inflation. Previously released data showed that both the US Consumer Price Index and Producer Price Index have accelerated significantly in recent months, indicating that inflationary pressures have gradually spread from the initial energy price increases to more goods and services sectors.
However, as the US and Iran are expected to sign a provisional peace agreement this Friday, market expectations for a recovery in energy supply have significantly increased. Influenced by this, international oil prices have fallen sharply recently, while US stocks have continued to rise. Most economists believe the peak of this round of war-induced inflation may have passed, but due to lag effects in supply chain transmission, prices for some goods and services may still continue to rise in the coming months.
For the Federal Reserve, the sustained climb in import prices undoubtedly increases the difficulty of controlling inflation. The market widely expects the Federal Reserve to keep interest rates unchanged at the policy meeting concluding this week. However, as inflationary pressures persist above expectations, traders have now begun betting that the Fed may restart interest rate hikes before the end of this year.
Comments