U.S. producer prices unexpectedly rose in June as sustained increases in the cost of services offset declining energy prices, suggesting a recent moderation in inflation was likely temporary.
The Labor Department said on Thursday its producer price index for final demand ticked up 0.1 percent last month after being unchanged in May.
In the 12 months through June the PPI increased 2.0 percent, slowing after May's 2.4 percent advance as last year's energy-driven rise drops out of the calculation.
Economists polled by Reuters had forecast the PPI being unchanged last month and rising 1.9 percent from a year ago.
Federal Reserve officials are closely watching inflation, which has remained below the U.S. central bank's 2 percent target for five years. They have largely viewed the recent retreat in price pressures as transitory.
Labor market strength is expected to encourage the Fed to raise interest rates in December for a third time this year and announce in September a plan to start reducing its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities.
Fed Chair Janet Yellen told lawmakers on Wednesday that the economy was healthy enough for the central bank to raise rates and begin winding down its massive bond portfolio.