US producer prices fell 0.2% in June as energy prices eased, but the so-called core inflation rate rose by a more than expected 0.3%, official figures showed today.
The producer price index PPI, a measure of inflation at the wholesale level, was tamer than expected on Wall Street, where analysts had expected a 0.1% rise.
However, the core rate, seen by some experts as a better indication of future trends, was higher than the 0.2% rise expected.
Falling energy and food prices unexpectedly put US wholesale inflation into negative territory for the first time in five months.
Energy prices fell 1.1%, the largest drop since January, with petrol falling 3.9%.
Food prices declined 0.8%, the largest drop since May 2006.
The report showed a 1.4% jump in car prices and personal health products showed a 1.3% increase. Producer prices have now risen 3.3% over the past year with core prices up 1.8%.
Inflation figures are being closely watched by financial markets to determine whether the Federal Reserve will hike interest rates to curb price pressures.
More significant will be tomorrow's consumer price index (CPI) report, which may show how much of wholesale price increases are being passed onto consumers.
