US producer prices rose only slightly in June as energy costs dropped, suggesting inflation pressures remain muted and leaving the door open for more easing by the Federal Reserve.
The Labor Department said that its seasonally adjusted producer price index rose 0.1% last month. Analysts had expected the index to drop 0.5%.
The increase was driven by gains in consumer goods like household appliances, light trucks and pet food.
While wholesale prices of finished goods rose, costs for intermediate and crude goods fell, suggesting less inflation pressure down the road.
So-called core inflation, which strips out more volatile food and energy prices, rose 0.2%, in line with expectations. While overall inflation has cooled recently, core inflation has held at higher levels.
Some policymakers at the Fed worry that further moves to lower borrowing costs could fuel higher inflation, though the central bank has said it was ready to do more to help the economy if needed.
Energy prices dropped 0.9% in June, dragged down by a record drop in prices for residential electric power, which fell 2.1%. Diesel fuel prices sank 8.8%.
The fall in energy prices is likely to help the economy as lower costs for fuels and other input prices leave companies more money to spend on other things, such as equipment or even hiring.
Many employers are concerned over plans by the US government to cut spending and let tax cuts expire next year, a jolt that could send the economy into recession.