Import prices plug ugly

Big surprise in the March import price report out this morning -- Prices surged 1.7% between February and March, more than double the 0.8% increase that was forecast. That pushed the year-over-year rate of import inflation up to 2.8%, the fastest since last August.

Now let's be honest -- a lot of the increase stems from rising energy prices. Fuels and lubricants were up 8.4% MOM. And we all know that doesn't matter because none of us drive cars, fly airplanes, or ship goods. But ex-petroleum, import prices were up 0.3% (the biggest gain since December). The ex-petroleum inflation rate is up to 2.9% YOY, the worst since October 2005.

Another interesting trend: We're not seeing as much "imported deflation" from Asia. Prices of Chinese imports rose 0.2% on the month, the biggest gain in quite some time. Prices of Japanese imports were also up 0.1%, the first gain in a while.