U.S. import prices climb 3% in 2017 - biggest increase in six years

Getty ImagesThe cost of goods imported into the U.S. rose 3% in 2017, up sharply from the year before.

The numbers: The cost of goods imported into the U.S. rose slightly in December and finished the year with a 3% increase - the biggest gain in six years.

Although that's much higher than the 1.9% gain in 2016, it still reflects a generally low level of inflation.

In December, import prices edged up a scant 0.1% after a big oil-inspired increase in the prior month. Minus energy import prices fell 0.1%

Export prices fell 0.1% in December, the government said. They rose 2.6% for all of 2017.

What happened: The cost of oil and other forms of energy rose more slowly in December. Energy prices have a big impact on overall import inflation and they largely account for the increase in 2017.

Energy aside, the prices of most imports are little changed. Import prices excluding energy rose just 1.4% in 2017. That's much higher than the 0.2% reading in 2016 and it's the biggest increase since 2011, but it's still quite low by historical standards.

Big picture: Most of the inflation feeding into the U.S. from abroad has come in the form of higher oil prices. That's not a problem in the short run, but if energy prices stabilize at higher levels it could generate inflation in other areas as well.

Many economists expect inflation broadly to perk up in 2018, and not just because of energy. An improved global economy might trigger higher prices for a variety of raw or partly finished goods. And tighter labor markets could force companies to pay more and lead to wage inflation.

Higher inflation, in turn, could force the Federal Reserve to raise interest rates more aggressively than the central bank plans.

Market reaction: The Dow Jones Industrial Average DJIA, +0.81% and the S&P 500 index SPX, +0.70% were set to open lower in Wednesday trades.