U.S. Labor Department said its producer price index excluding the volatile food, energy and trade services components rose 0.3% last month. The so-called core PPI rose by the same margin in June.

In the 12 months through July, the core PPI increased 2.8% after rising 2.7% in June. The strong labor market and robust economy are pushing up inflation. Import duties are also seen boosting price pressures.

The Fed's preferred inflation measure, the PCE price index excluding food and energy, increased 1.9% in June. The core PCE price index hit the U.S. central bank's 2% inflation target in March for the first time since December 2011.

The Fed raised interest rates in June and has forecast two more hikes by December. Data on Friday is expected to show a steady broad increase in consumer prices in July.

While overall producer prices were unchanged in July for the first time in seven months, inflation pressures at the factory gate are gradually building up. Intermediate prices for steel mill products rose 1.6% in July, lifting the annual increase to 12.4%.

The Commerce Department showed wholesale inventories edged up 0.1% instead of being unchanged as reported last month. That followed a 0.3% rise in May and kept the inventory-to-sales ratio at a very low 1.25.

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