US producer prices rose by more than expected in March, spurred by higher energy costs, figures show.

Prices paid to US producers climbed by 1.1% in March, after rising 0.3% in February, the Labor Department said.

Monthly core producer prices, which exclude food and energy costs, were in line with forecasts at 0.2%

Producer prices show the amount domestic firms get for their products. However, rising raw material costs are eating into company profits.

Inflationary pressures usually appear earlier in producer prices than in consumer or retail price figures.

Year-on-year producer prices rose 6.9%.

Commodity prices

Ron Simpson, director of FX research, said: “The [producer prices] report will remove expectations that the Fed will cut 50 basis points at the next meeting even though the US economy is slowing down”.

With firms limited in how much they can pass on higher energy costs to consumers, there are growing fears that higher energy prices will dent corporate earnings and contribute to a wider economic slowdown.

The producer price figures came after crude oil hit a new record high of $112.48 a barrel.

“The Fed has put a lot of stock to the idea that demand will soften… but commodity prices continue to go up,” said Keith Hembre, chief economist at FAF Advisors.

Separate figures that give a snapshot of manufacturing in New York State suggested a degree of stabilisation in April after falling sharply in March, the New York Federal Reserve said.

The index of general business conditions climbed to a reading of 0.63 in April from minus 22.23 in March