Prices received by U.S. producers fell in September for the first time in over a year, a potentially worrisome sign for the economy in that inflation appears to be failing to gain traction.
U.S. producer prices slipped 0.1 percent last month, the Labor Department said on Wednesday.
While many indicators have pointed to a strengthening U.S. economy, policymakers at the Federal Reserve are concerned that inflation has been stuck below their 2 percent target.
Some Fed watchers believe concerns about persistently low inflation could lead the U.S. central bank to delay interest rate hikes expected to begin in the middle of next year.
While the Fed targets an inflation gauge prepared by the Commerce Department that looks at consumer purchases, the producer price report can point to inflation pressures down the road. And Wednesday's report suggests these are generally lacking.
Producer prices rose 1.6 percent in the year through September, the lowest annual reading in six months and down two tenths from August's print.
The PPI last month was dampened by a 2.6 percent decline in gasoline prices. Food prices slipped 0.7 percent.
When stripping out volatile food and energy prices, producer prices were unchanged during the month. However, these so-called core producer prices rose 1.6 percent from the same month of 2013, a slowdown from August's annual reading.
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Separately, manufacturing activity in New York state in October slowed to its weakest pace since April after posting its strongest pace in nearly five years the previous month, the New York Federal Reserve said in a report on Wednesday.
The New York Fed's Empire State general business conditions index plunged to 6.17 from September's 27.54, which was the highest reading since October 2009.
Economists polled by Reuters had expected a reading of 20.50 this month. A reading above zero indicates expansion.
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New orders sank to their lowest since April at minus 1.73 from 16.86, while inventories grew to 2.27 from minus 7.61 in September.
The pace of growth in employment gauges was mixed, with the index for the number of employees rising to 10.23 from 3.26, while the average employee workweek index slipped to minus 1.14 in October from September's 3.26.
The index of business conditions six months ahead fell to 41.66 from 46.72 the previous month.
The survey of manufacturing plants in the state is one of the earliest monthly guideposts to U.S. factory conditions.