The Labor Department said the seasonally adjusted index of prices paid by producers at the gates of factories and farms in the United States fell 0.6 percent in February, the biggest decline since July, after rising 1.4 percent in January.
Economists polled by Reuters had expected the index showed a decline of 0.2 percent in February. From February last year, producer prices rose 4.4 percent, but slowed about advancing 4.6 percent in January.
The figure was below market expectations of a rise of 4.9 percent.
By removing volatile food and energy, core producer prices rose 0.1 percent from up 0.3 percent in January. For this category, analysts forecast a rise of 0.1 percent.
"On balance, it seems that price pressures are quite moderate in terms of core producer prices right now," said Jonathan Basile, economist at Credit Suisse in New York.
"This suggests there is some kind of generalized inflationary pressure through the channel of production," he said.
The reports came a day after the Federal Reserve should renew its commitment to keep interest rates exceptionally low for an extended period of time, arguing that a substantial resource slack keep inflation contained for some time.
The Fed left interest rates within a range from zero to 0.25 percent.
The Labor Department attributed the decline in wholesale prices in February to a 2.9 percent drop in energy costs, which also suffered its biggest decline in seven months and represented a sharp reversal compared to January, when it rose 5.1 percent.
Gasoline prices fell 7.4 percent, after rising 11.5 percent in January. The food prices rose 0.4 percent after having advanced the same margin in January.
After the fact, U.S. Treasuries widened slightly profits and stock futures continued their advance. The foreign exchange market did not react to the data.
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