Reversing gains made in the previous two months, U.S. producer prices were down unexpectedly in July, according to official figures released on August 12.
The Labor Department said its producer price index for final demand fell 0.4%, after having risen 0.5% in June and 0.4% in May.
Analysts had expected the index, which measures price changes for goods, services and construction and can be indicative of inflation, to remain flat.
Blerina Uruci of Barclays said that June's figures had shown a gradual firming of prices in domestic production. "However, the weakness in the July report brought PPI final demand back into deflation," she wrote in a research note.
Markets have been on tenterhooks, awaiting signs of a return to inflation in the U.S. economy which could spur monetary policy makers to raise interest rates.
After announcing a course of rate hikes for the year, the Federal Reserve has instead chosen to wait and see.
Prices for energy, food and trade services were flat in July after rising 0.3% in June.
For the year ended in July, prices not including food, energy and trade were up 0.8%.
"Much weaker than expected, although much of the surprise was in highly erratic trade margins," said Jim O'Sullivan, chief economist at High Frequency Economics.
Nearly 60% of July's decline in services prices was due to a 6% drop in the indices for apparel, jewelry, footwear and accessories retailing, according to the Labor Department.
However, other indices were also down, including machinery and equipment wholesaling; health, beauty and optical goods retailing; and food retailing and loan services.
"It's very hard to believe margins are as volatile as the data show," a research note from Pantheon Macroeconomics said.
"The true trend in core PPI is probably rising slowly."
Copyright Agence France-Presse, 2016