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Economic Report: Import prices shoot up in May to highest level since 2011 and add to mounting U.S. inflation

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The cost of imported goods climbed again in May and contributed to the biggest flareup in U.S. inflation in more than a decade — a flareup the Federal Reserve insists will die out once the economy fully returns to normal.

The import price index advanced 1.1% in last month, the government said Wednesday. Economists polled by Dow Jones and The Wall Street Journal had forecast 0.7% increase.

Import prices have climbed 11.3% over the past 12 months to mark the fastest pace since 2011.

The cost of foreign oil, cars and trucks, consumer goods and industrial supplies all rose in May.

Excluding fuel, import prices moved up 0.9%.

Inflation is rising by every measure, but the Fed blames it on temporary shortages and spikes in demand tied to the reopening of the economy. Americans are rushing to buy or do all the things they couldn’t do during the pandemic.

Read: U.S. consumer prices soar again and push inflation rate to 13-year high

Also: How high will inflation go? Check out MarketWatch’s new tracker.

Once the economy settles down, top Fed officials say, supply and demand should start to balance out and upward pressure on prices will ease.

Don’t expect it to happen very soon, though. The rate of inflation is likely to remain elevated through the end of the year before tapering off in 2022, most economists predict.

Read: High lumber prices and other barriers choke the confidence of home builders and home buyers

Fed Chairman Jerome Powell will give more insight into the Fed’s thinking on Wednesday afternoon after the central bank’s latest evaluation of the U.S. economy.

Inflation has run somewhat higher than the Fed expected, though the bank has stuck to its forecast that it will recede back toward a 2% annual rate in 2022.

The report had little sway on stocks or bonds. The Dow Jones Industrial Average
DJIA,
-0.27%

and S&P 500
SPX,
-0.20%

were set to open slightly lower in Wednesday trades.

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