Us producer prices rose more than expected in July, suggesting rising commodity costs and supply bottlenecks are still adding to corporate inflationary pressures.

Data released by the labour department on Thursday showed that the final demand producer price index (PPI) rose 1 per cent in July from a month earlier, 7.8 per cent from a year earlier, the largest year-on-year increase since records began in 2010, while core PPI, which excludes food and energy, rose 1 per cent month-on-month and 6.2 per cent from a year earlier.

The median forecast of economists surveyed by Bloomberg shows that the overall PPI is up 0.6% from the previous month, and the core PPI is up 0.5% from the previous month.

Producer prices have been accelerating for most of this year against a backdrop of strong demand, limited supply chains and shortages of raw materials. Rising input costs, coupled with recent wage pressures, help explain the rise in consumer price inflation.

Data on Wednesday showed that US consumer price growth slowed in July, but the slowdown failed to fully eliminate the pressure of rising costs at a time when rising prices hit consumer confidence and fuelled policy debate.

Service industry inflation

PPI rose nearly 3/4 in July, reflecting a record 1.1 per cent rise in the services sector. PPI final demand for services is growing widely, with both wholesalers and retailers showing strong profit margins.

Final demand PPI, which excludes food, energy and trade services, rose 0.9 per cent month-on-month, the biggest increase since January. Up 6.1% from a year earlier.