U.S. producer prices increased slightly more than expected in February as a rise in the cost of services offset a decline in the price of goods.
Figures released Wednesday by the U.S. Labor Department said on Wednesday its producer price index (PPI) for final demand rose 0.2% last month after increasing 0.4% in January.
That lifted the year-on-year increase in the PPI to 2.8% in February from 2.7% in January. Economists polled by Reuters had forecast the PPI gaining 0.1% last month and increasing 2.8% from a year ago.
A key gauge of underlying producer price pressures that excludes food, energy and trade services rose 0.4% last month, matching January's gain. In the 12 months through February, the so-called core PPI increased 2.7%. That was the biggest gain since August 2014 and followed a 2.5% advance in January.
The solid increase in underlying wholesale prices supports views that consumer inflation will pick up this year.
Economists believe that a tightening labour market south of the border, a weak U.S. dollar and fiscal stimulus in the form of a $1.5-trillion tax cut package and increased government spending will push inflation toward the Federal Reserve's 2% target this year.
The U.S. central bank's preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, has undershot its target since May 2012.
