A sharp rise in petrol costs drove up US wholesale prices last month by the most in more than three years.

But outside energy and food, price gains were mild, the Labor Department said today.

The producer price index, which measures price changes before they reach the consumer, jumped 1.7% in August.

The increase was mostly because petrol prices soared 13.6%, the biggest gain in three years.

Food prices rose 0.9%, driven by steep increases in the cost of eggs and dairy products. Excluding the volatile food and petrol categories, core wholesale prices rose only 0.2%, below July's increase.

The US government will issue its August report on consumer prices tomorrow. In the past 12 months, wholesale prices have increased 2%, a mild gain and far below the recent peak of 7.1% in July 2011. Core wholesale prices have risen 2.5% in the past year, the same annual pace as in July.

Food prices are likely to rise further in the coming months as the Midwest drought has made corn, soybeans and other grains much more expensive. Sweet corn prices jumped 44% last month, the most in a year and a half. Higher corn prices raise costs for many different foods on grocery store shelves.

Corn is used to make everything from cosmetics to cereal, soda, cake mixes and sweets. It is also used as a feed for cattle and pigs. That means more expensive corn can also push up beef and pork prices. A measure of food prices in earlier stages of processing rose 2.4% last month, the biggest gain in about 18 months. The increase was mostly because the cost of animal feed rose.

But overall, economists are not worried that inflation is rapidly accelerating. With US economic growth weak and unemployment high, workers' wages are barely keeping up with inflation. That means consumers will not be able to pay much higher prices.

In July, consumer prices were unchanged, and rose only 1.4% in the previous 12 months. That is below the Federal Reserve's informal target of a 2% annual increase.

Low inflation means consumers have more money to spend, which helps the economy. It also gives the Federal Reserve more room to keep interest rates low in an effort to spur economic growth.

If prices were to begin rising rapidly, the central bank might be forced to raise rates in response. Most analysts expect the Fed to take new steps to boost economic growth at the end of a two-day meeting later this evening.

Those steps could include a third round of Treasury bond purchases. The goal of the purchases would be to lower interest rates and spur more borrowing and spending.

Fed Chairman Ben Bernanke said in a recent speech that high unemployment is "a grave concern" that causes "enormous suffering." Those remarks were seen by many economists as a sign that Bernanke was likely to take more action.

Hurricane Isaac sends US jobless claims higher

The number of Americans seeking unemployment benefits jumped to the highest weekly level in two months, although the figures were skewed in part by Hurricane Isaac.

Applications increased by 15,000 to a seasonally adjusted 382,000, the Labor Department said today. That is up from 367,000 the previous week. The four-week average, a less volatile measure, increased for the fourth week in a row to 375,000.

Isaac made landfall as Category 1 hurricane on August 28 in Louisiana and was later downgraded to a tropical storm. It disrupted work in nine states and boosted applications by roughly 9,000, Labor officials said.

Applications for unemployment benefits reflect the pace of layoffs. The data on unemployment applications follow last week's weak August employment report. US employers added only 96,000 jobs in August, below July's gain of 141,000 and far below the average 226,000 a month added in the January-March quarter.

The unemployment rate dropped to 8.1% from 8.3%, but only because the number of people working or looking for work fell. The total number of people receiving unemployment aid fell to 5.4 million in the week ending August 25, the latest data available - about 80,000 fewer than the previous week.

Some of the decline may result from more people getting jobs. But many recipients are using up all the benefits available to them. Many economists have noted that while layoffs are falling, overall hiring is not picking up at the same pace.

A separate monthly report from the Labor Department this week showed that layoffs were at the lowest level in July for the 11 years the government has tracked the data.

The economy is not growing fast enough to support much more hiring. It grew at a tepid 1.7% annual rate in the second quarter, down from 2% in the first quarter and 4.1% in the final three months of last year.

Growth is not likely to get much better for the rest of this year. Economists expect it to grow at a roughly 2% pace. That is typically too weak to create enough jobs to lower the unemployment rate.