A strong increase in car output boosted US factory production last month, the latest sign that manufacturing is helping drive economic growth after lagging for much of 2012.

The Federal Reserve said that factory output rose a seasonally adjusted 0.8% in February from January, after falling 0.3% in the previous month.

The biggest gain was in cars and car parts, where production increased 3.6% after falling 4.9% in January.

Car sales have risen steadily this year after reaching a five year high in 2012.

Overall industrial production, which includes mining and utilities, rose 0.7% in February - the biggest gain in three months.

Utility output jumped 1.6% while mining output, which covers oil and gas drilling, fell 0.3%, the third decline in a row.

Petrol spike drives US consumer prices up 0.7%

A spike in petrol prices drove a measure of US consumer costs up in February by the most in more than three years. But outside the gain in fuel costs, inflation was mostly modest.

The consumer price index increased a seasonally adjusted 0.7% last month from January, the Labor Department said today. It was the biggest monthly rise in the index since June 2009.

But three quarters of the increase in the index reflected a 9.1% surge in petrol prices. That was also the biggest monthly gain since June 2009. Petrol prices had fallen in the previous four months and since last month's increase they have fallen slightly.

For the 12 months that ended in February, prices increased 2% - in line with the Federal Reserve's inflation target.

Excluding volatile food and energy costs, core inflation rose just 0.2% in February. Prices for cars fell 0.3%, the largest monthly decline in three years. Airline fares and clothing prices also fell, while monthly rents and used car prices increased.

Over the past 12 months, core prices have risen just 2%. Low inflation leaves consumers with more money to spend, which benefits the economy. It also allows the Federal Reserve leeway to keep interest rates low to help spur economic growth.

The Labor Department said today that in February, total energy costs rose 5.4%. In addition to petrol, prices for natural gas and home heating oil also showed big gains.

Food prices grew just 0.1%. Prices for fruits and vegetables saw a 1.4% jump, while meat, poultry and fish prices increased 0.5%. Most other food prices declined.