The Labor Department said Wednesday the producer price index for final demand climbed 0.3% last month after a 0.5% gain in May. In the 12 months through June, the PPI advanced 3.4%, the largest increase since November 2011.

Economists had been expecting a monthly gain of 0.2% in June and a 3.2% year-on-year increase.

The June jump reflected a 0.4% gain in the cost of services and motor vehicles, with a 21.8% gain in the index for fuels and lubricants retailing. That accounted for about 40% of the rise in the cost of services last month.

But so-called core PPI — a key gauge of underlying producer price pressures that excludes food, energy and trade services — rose 0.3% last month after edging up 0.1% in May.

“The level of inflation is still relatively low historically and the PPI is not an especially accurate predictor of future trends,” MarketWatch said. Most economists tend to discount its readings.”

“Still, if prices keep rising, the Federal Reserve will feel compelled to raise interest rates more aggressively,” the publication added. “That would raise the cost of borrowing for businesses and consumers.”

Economists believe tensions over trade and the imposition of tariffs will put further upward pressure on prices. “With underlying inflationary pressures building even before the tariffs, we suspect the Fed will be forced to continue raising rates once a quarter,” Michael Pearce, senior U.S. economist at Capital Economics in New York, told Reuters.

Prices for goods edged up 0.1% in June, reflecting a 1.1% drop in food prices. Wholesale gas prices rose only 0.5% after jumping 9.8% in May.

“Since the PPI covers the price of domestically produced goods, these gains represent U.S. producers raising prices behind the tariff wall or the impact of higher input costs,” said John Ryding, chief economist at RDQ Economics in New York. “We expect these price pressures will flow through into higher core inflation at the consumer level as the year unfolds.”

Producer Prices Rise 3.4% Year on Year in June