Producer prices fell in December as companies paid less for gasoline and vegetables but a measure of underlying inflation climbed higher, sending mixed signals about inflation pressures in the economy.

The Labor Department said on Wednesday its seasonally adjusted index for prices received by farms, factories and refineries fell 0.1 percent.

Economists polled by Reuters had expected wholesale prices to increase 0.1 percent.

Excluding volatile food and energy, core producer prices rose 0.3 percent last month, fueled by a big gain in prices for light motor trucks. It was the biggest rise since July and above economists' expectations for a 0.1 percent gain.


Graphic on producer prices:

Graphic on mortgage market index:


A drop in energy prices has encouraged Wall Street and the U.S. Federal Reserve to forecast inflation will cool in coming months. Energy costs for businesses fell 0.8 percent last month, with gasoline down 2.3 percent. Food prices fell 0.8 percent.

That brought the 12-month reading for producer price inflation down to 4.8 percent, a bigger drop than expected after coming in at 5.7 percent in November.

At the same time, higher core prices - if eventually passed on to consumers by businesses - might make the U.S. central bank more cautious about taking additional steps to help the still-struggling U.S. economy.

The real surprise here was that the core was up (but) overall the report is still relatively benign, said Jacob Oubina, an economist at RBC Capital Markets in New York.

Core prices rose 3.0 percent in the 12 months through December, up from the previous month.

Investors in U.S. stocks appeared to shrug off the data, with futures rising after sources at the International Monetary Fund said the institution wants to boost its lending facility as the euro zone battles a long-running debt crisis.

About 30 percent of the month-on-month gain in core prices were due to an increase in prices for light motor trucks, the Labor Department said.

Prices in auto sector have been affected in recent months by floods in Thailand that last year disrupted supply chains. Prices for light trucks rose 0.9 percent last month, the biggest rise since July.

(Additional reporting by Emily Flitter in New York; Editing by Andrea Ricci)