U.S. producer prices rose more than expected in September as the cost of energy surged, a government report showed on Friday, but underlying inflation pressures were muted.
The Labor Department said its seasonally adjusted Producer Price Index increased 1.1 percent last month.
Economists polled by Reuters had expected prices at farms, factories and refineries to rise 0.7 percent last month.
Despite the rise in overall wholesale inflation last month, there is likely to be little pass-through to consumers given sluggish job growth, which puts a brake on inflation.
Wholesale prices excluding volatile food and energy were flat last month. That was the lowest reading since October 2011 and fell short of analysts' forecasts.
Consumer inflation is currently below the Federal Reserve's 2 percent target, and many economists think it will trend below that level for years to come.
In a bid to boost economic activity, the Fed launched an aggressive new stimulus program last month, pledging to buy $40 billion of mortgage-backed debt a month until the outlook for jobs improves substantially.
Overall producer prices last month were buoyed by a 4.7 percent increase in energy prices. Higher gasoline costs drove the increase. Wholesale diesel prices also contributed, rising 9.2 percent, the biggest one-month gain since December 2010.
Food prices rose 0.2 percent, backing off of the faster pace of price increases seen over the summer when a severe drought pushed up the cost of grain and soybeans.
In the 12 months to September, producer prices increased 2.1 percent, biggest gain since March, after advancing 2 percent in August.
Outside food and energy, producer prices were restrained by a decline in the cost of communication equipment.
Core producer prices increased 2.3 percent in the 12 months to September.
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CNBC's Rick Santelli weighs in on the latest Producer Price Index number.