U.S. producer prices rose 0.6 percent in June on higher fuel costs, after a 0.2 percent decline in June, according to the Labor Department. Bloomberg News reported that core producer prices, which exclude fuel and food, rose 0.1 percent, the smallest gain in three months. Analysts had forecast producer prices, which are one of three monthly inflation measures the government reports, would rise 0.2 percent.

Fuel prices rose 2.5 percent last month, after a 1.1 percent drop the previous month. Gasoline prices rose 3.2 percent, while natural gas costs rose 2.7 percent. Raw material prices jumped 1.2 percent after a 0.3 percent increase in June, and the cost of intermediate goods, those used in early stages of production, rose 0.6 percent.

Prices paid to U.S. producers were up 4 percent from July 2006, compared with a 3.3 percent gain in the 12 month ended in June. Core prices rose 2.3 percent for the year, compared with a 1.8 percent gain for the 12 months ended in June.

Tomorrow the Labor Department will release a report on the Consumer Price Index. Analysts have estimated it rose 0.1 percent in July, after a 0.2 percent increase in June.