Import prices increased 2.3% in May -- higher than expected -- driven by near record-high prices for imported oil and natural gas, the U.S. Labor Department announced Thursday. Excluding energy, import prices increased a scant 0.5% in May.

Economists surveyed by Bloomberg News had expected import prices to rise 2.0% in May. Import prices increased 2.4% in April and 3.0% in March.

In May, imported petroleum increased 7.8%, and natural gas increased 5.4%. Further, petroleum prices rose 68.8% for the year ended May 2008 -- the largest 12-month advance since the index increased 82.5% between February 2002 and February 2003.

Meanwhile, export prices increased 0.3% in May 2008, its smallest rise since September 2007. Further, export prices rose 8% over the past year.

Agriculture export prices rose just 0.3% in May, following a 2.1% decline in April. Agriculture export prices have risen 33.3% over the past year, with strong international food demand in emerging markets boosting U.S. farmers' pricing power.

Turning back to imports, in May capital goods prices increased 0.3%, consumer goods rose 0.2%, and automotive prices were unchanged. Foods, feeds and beverages rose 1%, led by higher prices for meats and grains.

Regarding exports, in May consumer goods prices rose 0.4%, automobiles increased 0.1%, and capital goods were unchanged.

Economic Analysis: A slightly higher-than-expected gain in import prices in May, but one that is fairly mild excluding surging energy prices. Still, almost every individual and corporation purchases energy, so the increase is something the U.S. Federal Reserve will monitor, but import prices are not the sole metric in the Fed's inflation analysis formula. Further, import prices reflect the consequences of a weak dollar -- with selected foreign manufacturers increasing prices to offset the dollar's decreased purchasing power. Regarding exports, agriculture products continue to perform well -- due to solid international demand, as farming remains one of the bright spots in the U.S. economy.