US producer prices rose more than expected in December but they advanced at a far more moderate pace than a month earlier on smaller gains in energy prices, according to a government report.
This added to expectations that the Federal Reserve is not likely to cut interest rates over the next few months as the economy still shows some risks of inflation.
The Labor Department's Producer Price Index increased by 0.9% in December. Excluding volatile food and energy prices, the index advanced by 0.2%, after rising 1.3% the previous month.
In December, food and energy prices rose 1.7% and 2.5%, respectively, after rising 0.1% and 6.1% in November.
Wall Street economists were expecting to see a 0.4% rise in consumer prices in December and a 0.2% gain in the core CPI, which excludes food and energy prices.
A separate report today showed that US industrial output expanded more than expected in December, fuelled by robust increases in manufacturing and mining, although November's data was revised lower.
Output at US factories, utilities and mines rose a stronger-than-expected 0.4% in December, with analysts forecasting a 0.1% rise in output. But the Fed revised down its November industrial output to a 0.1% decline from a 0.2% increase.
However, warm weather drove output at utilities down 2.6%, but even so, economists said it was a strong showing for the US industrial sector.
