U.S. producer prices rose more than twice as much as expected in August on the biggest surge in gasoline prices in more than 10 years and prices declined less than expected compared with a year ago, a government report showed on Tuesday.

The Labor Department said the seasonally adjusted index for prices paid at the farm and factory gate jumped 1.7 percent last month and fell 4.3 percent from August 2008. Analysts expected producer prices to rise 0.8 percent on the month and to fall 5.3 percent on the year.

(Reporting by Mark Felsenthal, Editing by Neil Stempleman)