US producer prices eased in April and costs excluding food and energy remained contained, suggesting inflation is not a near-term concern for officials at the Federal Reserve.
The US producer price index, which measures costs paid by the nation's farms and factories, dipped 0.1 per cent last month following a 0.7 per cent rise in March, the Labor Department said.
Analysts polled by Reuters had forecast a 0.1 per cent gain.
Compared to April of last year, prices climbed 5.5 per cent, slightly beneath market forecasts.
Core prices, which exclude food and energy goods, climbed 0.2 per cent from the prior month, and were up just 1 per cent compared to a year earlier, at the bottom of the Federal Reserve's presumed comfort range between 1 per cent and 2 per cent.
The inflation numbers, along with ongoing market stresses related to worries over the debt outlook for some European nations, suggested policymakers at the US central bank have some leeway to extend their ultra-easy monetary policy.
Separately, US housing starts touched a 1-1/2 year high in April, but a drop in permits to a six-month low suggested housing market recovery will remain slow.
Housing starts rose 5.8 percent to a seasonally adjusted annual rate of 672,000 units, the Commerce Department said, likely supported by the looming expiry of a home buyer tax credit. March's housing starts were revised to show a 5 per cent increase, instead of a 1.6 per cent gain.
Markets had expected housing starts to rise to 650,000 units. Compared to April last year, starts were up 40.9 per cent, the largest increase since March 1994.
"It is still a very moderate recovery in housing, it is not a V-recovery. But it is supporting growth now, which is good news," said Kurt Karl, chief US economist at Swiss Re, in New York.
Reuters