U.S. producer prices rose more slowly than expected in October despite a rebound in food and energy costs, according to a government report on Tuesday that pointed to tame inflation pressures.
The Labor Department said the seasonally adjusted index for prices paid at the farm and factory gate rose 0.3 percent following a 0.6 percent drop in September.
Analysts polled by Reuters had expected producer prices to increase by 0.5 percent last month. Compared with the same period last year, producer prices were 1.9 percent lower in October, a touch softer than market expectations for a 1.8 percent drop.
Excess economic slack following the worst U.S. recession in 70 years has largely suppressed inflation but there are fears that massive efforts by both the government and the Federal Reserve to restore growth could ignite price pressures in the future.
The department said that gasoline prices rose 1.9 percent last month and were down 16 percent versus a year ago. Finished consumer foods rose 1.6 percent on the month, the largest gain since February 2007, and were down 2.7 percent compared to October last year.
Core producer prices, which exclude food and energy costs, unexpectedly dropped 0.6 percent last month -- the largest decline since July 2006 -- after slipping 0.1 percent in September. The core index had been forecast to rise 0.1 percent in October.
The core producer price index was 0.7 percent higher measured on a year-on-year basis, versus a forecast for a 1.4 percent rise. The core index excluding cars and light trucks rose 0.1 percent from September. Light motor truck prices fell 5.2 percent in October, the biggest drop since October 2006.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)