Wholesale inflation accelerated for the second month in a row, mirroring a similar trend in the Consumer Price Index report, the Bureau of Labor Statistics reported Thursday.

The Producer Price Index, a key measure of price changes at the wholesale level, rose to 1.6% from 1.3% for the 12 months ending in August.

On a month-to-month basis, producer price increases rose to 0.7% in August from July's 0.3% pace. That was above with economists' expectations of a 0.4% increase. August's uptick was the largest one-month increase since June 2022.

Rise in energy prices drove index higher

The majority of August's overall acceleration came from the 2% rise in final demand for goods, driven by a 10.5% increase in energy prices. In contrast, final demand for services rose by 0.2%. In prior months, service-side inflation was responsible for driving the index higher.

Stripping out the more volatile categories of food and energy, core PPI rose 2.2% on an annual basis in August, in line with economists' expectations.

On a month-to-month basis, core PPI leveled off slightly, rising by 0.2% versus July's revised 0.4% gain. This was also in line with economists expectations.

The PPI is a closely watched inflation gauge, since it captures average price shifts upstream of the consumer. It is viewed as a potential leading indicator of how prices could eventually behave at the store level.

This story is developing and will be updated.