U.S. producer prices rebounded in August, driven by a surge in the cost of gasoline, and there were also signs of a pickup in underlying producer inflation.
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The Labor Department said its producer price index for final demand increased 0.2 percent last month after slipping 0.1 percent in July. In the 12 months through August, the PPI rose 2.4 percent after advancing 1.9 percent in July.
Economists had forecast the PPI gaining 0.3 percent last month and accelerating 2.5 percent from a year ago.
A key gauge of underlying producer price pressures that excludes food, energy and trade services rose 0.2 percent last month after being unchanged in July. The so-called core PPI increased 1.9 percent in the 12 months through August after a similar gain in July.
Inflation is being closely watched for clues on the timing of the next interest rate increase from the Federal Reserve. Economists expect the U.S. central bank will announce a plan to start reducing its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities at its Sept. 19-20 policy meeting.
The Fed is expected to delay raising rates until December. Last month's increase in producer inflation is unlikely to translate into a similar gain in the Fed's preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy.
The annual increase in the core PCE has consistently undershot the central bank's 2 percent inflation target since mid-2012. The core PCE rose 1.4 percent in July, the smallest year-on-year increase since December 2015.
Last month, gasoline prices jumped 9.5 percent after declining 1.4 percent in July. The increase was the largest since January and accounted for 75 percent of the 0.5 percent rise in the prices of goods.
The cost of food fell 1.3 percent, the biggest drop since February 2015, after being unchanged in July.
Core goods prices rose 0.2 percent last month after slipping 0.1 percent in July. The cost of services edged up 0.1 percent after falling 0.2 percent in July. A 1.7 percent surge in the cost of consumer loans accounted for more than half of the increase in the price of services last month.
The cost of healthcare services increased 0.3 percent after a similar gain in July. Those costs feed into the core PCE price index. (Reporting by Lucia Mutikani; Editing by Paul Simao)