Inflation at the wholesale level -- led by big gains in the cost of energy, new cars and tobacco -- climbed 0.5 percent last month, the fastest pace this year.
The Labor Department said today that the September gain in its Producer Price Index, which measures cost pressures before they reach the consumer, followed a 0.3 percent rise in August.
The September advance was the worst showing for wholesale prices since a similar 0.5 percent rise last December and it was more than double the 0.2 percent rise that economists had been expecting.
Energy prices jumped 1.5 percent, while food prices were up a modest 0.1 percent.
The core rate of the Labor Department's producer price index -- which excludes food and energy costs -- rose 0.4 percent, reflecting higher tobacco and motor vehicle costs.
However, excluding tobacco and autos, the core rate rose just 0.1 percent, according to a Labor Department spokesman, a sign most prices remain well behaved.
The 1.4 percent jump in new car prices was the biggest since October 1994.
Cigarette prices posted increases, stemming from the tobacco industry's mounting health-related court settlements and pending agreement with the federal government.
Philip Morris Cos. and RJR Nabisco Holdings Corp. recently raised their cigarette prices to wholesalers by 7 cents a pack, and smaller U.S. cigarette companies are likely to follow, said Sanford C. Bernstein & Co. analyst Gary Black.
The price increase works out to more than 7 percent at the wholesale level and about 4 percent for consumers, Black said.
For investors, businesses and Federal Reserve policy-makers, the question is whether the rise in producer prices is temporary -- or the beginning of higher costs that will eventually be passed onto consumers.
While the Fed has left interest rates unchanged since a small upward nudge in March, many economists believe the central bank is poised to start tightening credit further at the first whiff of inflation.
Wholesale prices so far this year are still falling at an annual rate of 1.4 percent because the August and September gains followed seven straight declines from January through July, something that had never occurred since the government first began measuring wholesale inflation in 1947.
The higher energy costs came from a 2.2 percent surge in gasoline costs and a 1.2 percent rise in residential natural gas at the wholesale level.