Wholesale Prices in US Climb by Most Since September 2012

Moreover, the department said, wholesale food prices were unchanged after climbing 0.5% in December.

USA producer prices rose more than expected in January, recording their largest gain in four years amid increases in the cost of energy products and some services, but a strong dollar continued to keep underlying inflation tame.

If prices continue to rise, the Federal Reserve could take a more aggressive approach to raise interest rates to squelch any potential for inflation to overshoot the central bank's 2% to 2.5% target, based on broader measure of inflation.

Economists polled by Reuters had forecast the PPI rising 0.3 percent last month and the year-on-year increase moderating to 1.5 percent.

Last month, prices for final demand goods increased 1.0 percent, the largest rise since May 2015.

United States producer prices index for final demand rose 0.6% in January following a 0.2% rise the previous month and this was higher than consensus forecasts of a 0.3% increase for the month. The increase followed a 0.6 percent gain in December.

The underlying increase was also higher at 0.4% from 0.3% previously and compared with an expected 0.2% increase. Over the past 12 months wholesale costs have risen 1.6%, but as recently as one year ago they were basically negative.

Margins for retailers also climbed sharply in January, though it's a volatile category that swings sharply from month to month and often skews the wholesale report.

Excluding food and energy, wholesale prices rose 0.4 percent from the previous month after a 0.1 percent rise. Much of the advance was due to the index for final demand trade services, which increased by 0.9%. The other two are import costs and consumer prices.