US wholesale prices continued to cool last month as services inflation increased, according to government data published Thursday.

The producer price index (PPI) rose by 0.2 percent in August after remaining unchanged a month earlier, according to new and revised figures from the Labor Department.

But on an annual basis, the PPI index came in at just 1.7 percent, down from a revised 2.1 percent last month, and well below the median forecast of a 2.2 percent rise from economists surveyed by Dow Jones Newswires and The Wall Street Journal.

The cooler PPI is yet more evidence that inflation continues to cool in the world's largest economy, following the news earlier this week that consumer inflation fell to an annual rate of 2.5 percent last month, its lowest level since February 2021.

Slowing consumer and producer inflation will be well-received by Federal Reserve officials, who have indicated they intend to start cutting interest rates next week in response to slowing inflation and a cooling labor market.

Despite the slower headline rate of PPI, there is cause for concern from the PPI index which strips out volatile food, energy and trade figures.

It rose by 0.3 percent from a month earlier, and by 3.3 percent from 12 months ago -- marking an increase from July.

Much of the rise in producer prices between July and August can be attributed to a 4.8 percent month-over-month rise in the index for guestroom rental, which fueled much of the 0.4 percent rise in the services index.

da/st