Producer prices rose by the most in three years in August as energy costs surged, but underlying inflation pressures remained contained, keeping the door open to a further easing of monetary policy.
Other data on Thursday underscored the weakness in the labor market, a major concern for the Federal Reserve, with the number of Americans filing new claims for state unemployment benefits touching a two-month high, although some of the gain was attributed to Tropical Storm Isaac.
The reports came as officials from the central bank debated whether to launch another controversial round of bond purchases to push borrowing costs lower in an effort to spur a stronger recovery.
Economists said the strong rise in wholesale inflation was unlikely to translate into a sustained increase in prices at the supermarket and shopping mall, which would be troubling for the Fed.
"There is little indication that it's going to pass through to higher consumer inflation," said Gus Faucher, a senior economist at PNC Financial Services Group in Pittsburgh. "I don't think that if the Fed is looking to ease that this would stop them. We continue to have economic growth that is modest."
The Fed is expected to announce the launch of a third round of bond purchases at the end of its two-day meeting on Thursday. Its decision, which could also include tweaks to its pledge to hold rates near zero at least through late-2014, is expected around 12:30 p.m. EDT (1630 GMT)
The Labor Department said its seasonally adjusted producer price index increased 1.7 percent last month, the largest gain since June 2009, after rising 0.3 percent in July.
Read more: http://www.reuters.com/article/2012/09/13/us-usa-economy-jobs-idUSBRE88C0MW20120913
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