U.S. producer prices rose more than expected in September to record their largest increase in five months as gasoline prices surged, a government report showed on Tuesday.

COMMENTS:

GARY THAYER, CHIEF MACRO STRATEGIST, WELLS FARGO ADVISORS, ST. LOUIS, MISSOURI

We've seen gasoline prices trend down over the summer, but the seasonal adjustment for that in the September PPI report was actually positive so it probably did not point to a new trend to higher inflation. It was more just a one-time aberration.

We also saw a bit of an increase in truck prices and that reflects that the auto industry is still doing okay. Vehicle sales rose in September. With inventories relatively lean there was some upward pressure on prices. I expect we'll see more auto production in the fourth quarter and that could ease some of those price pressures in the auto industry.

TIM GHRISKEY CHIEF INVESTMENT OFFICER OF SOLARIS ASSET MANAGEMENT IN BEDFORD HILLS, NEW YORK

The headline was well above expectations, the core was just very slightly above expectations and the core really continues to be what is key. Having the headline above expectations seems a little strange since we saw such a fall in both energy and food, commodity prices. But we did see I guess a little bit of a bounce back in some of those. The big sell off was in August. This just looks like some month to month volatility in the top line, specifically energy and food prices. The core remains very benign.

SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK

It is really surprising to see this sort of strength, especially in the environment that we expect to develop through the course of the year. Looking at this number it does seem there is a big upside from energy, which there are seasonal adjustment factors.

Undoubtedly this will be temporary, the core was a little bit firmer as well but it still looks to be very on-trend on the core or slightly above. But we should still see this abate over the course of the year. Recently commodity prices are starting to trend lower. I don't think this will be sustained.

CARY LEAHEY, MANAGING DIRECTOR AND SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK

You got a big spurt in the headline producer price index due to a fluky jump in energy which is going away, meaning that the headline number is a bit of a head fake. Excluding food and energy items, the index was up 0.2 percent, which is fine.

There is some discomfort in the intermediate core PPI which rose 0.2 percent. It's moderated since May as the global economy slowed, but there is still some inflation in the pipeline that has yet to make it all the way to the top. For those who are worried about a deflationary process, you don't see that in this report.

OMER ESINER, CHIEF MARKET ANALYST, COMMONWEALTH FOREIGN EXCHANGE

It's clearly much hotter than expected on the headline, year-over-year as well. Initially, it's somewhat concerning, though the decline in commodity prices and energy prices in particular over the last few weeks suggests this number is likely to come down from here. So I wouldn't be too concerned. I think the Fed thinks level of slack in the economy will keep these prices from filtering into consumer inflation. So I don't think this has a major impact on Fed policy outlook or the dollar. For now, the market is on hold for Bernanke this afternoon and is sensitive to any headlines from Europe.

WILLIAM LARKIN, PORTFOLIO MANAGER WITH CABOT MONEY MANAGEMENT IN SALEM, MA

The direction of inflation, from a bond holder's perspective, is a little on the dangerous side. Even with the soft spot we're in economically, inflation remains intact. Inflation is the one part of the equation that forces people to demand higher yields.

The bigger macro picture will drive trading today, so this is a second-tier number.

MARKET REACTION:

STOCKS: U.S. stock index futures hold losses.

BONDS: U.S. 30-year Treasury bond prices trim gains.

FOREX: The dollar pares gains versus euro.

Energy