US producer prices rose at their fastest pace in a year in May while initial jobless claims fell last week to provide fresh evidence today of the US economy's strength.
Prices received by farms, factories and refiners shot up a more-than-expected 0.8 per cent last month, the largest jump since March 2003, the Labor Department said.
While food and energy prices both rose sharply, the department's core Producer Price Index, which strips out those volatile costs, gained a larger-than-expected 0.3 per cent, adding to inflation jitters on Wall Street.
In a separate report, the Labor Department said first-time filings for state jobless aid fell 15,000 to 336,000 in the week ended June 12th, their lowest level since early May.
The Labor Department pinned some of that drop on the closure of state claims offices last Friday for the funeral of President Ronald Reagan, but claims have been hovering at levels indicating an improving labor market.
The dollar initially rose against the euro and prices for US government bonds fell, pushing yields higher, as investors worried the batch of data signaled growing inflation pressure.
Federal Reserve officials are widely expected to push overnight interest rates up a notch from their current 1958 low of 1 per cent as they begin a bid to head off inflation.
Fed officials have said they should be able to move rates up at a "measured" pace, but a pickup in inflation has fanned fears in the markets the Fed may need to move more aggressively.