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/ Source: Reuters

U.S. producer prices recorded their largest increase in nine months in March as the cost of food and services rose, pointing to some pockets of inflation at the factory gate.

The Labor Department said on Friday its seasonally adjusted producer price index for final demand increased 0.5 percent last month after slipping 0.1 percent in February. That was the largest increase since June last year.

Economists polled by Reuters had forecast prices received by the nation's farms, factories and refineries edging up 0.1 percent last month.

The drought out West has helped push food prices up for the third straight month. Producer prices posted their largest increase in 9 months in March.Marcio Jose Sanchez / AP

Food prices jumped 1.1 percent, the largest increase since May, after rising 0.6 percent in February.

Food prices were pushed up by a surge in the cost of pork, which saw its largest rise since August 2008. Sausage, deli meat and boxed meat prices rose by the most since August 1980.

Food prices have now risen for a third straight month, in part reflecting a drought in the West.

Energy prices fell 1.2 percent, the largest decline in nearly a year. Services for final demand spiked 0.7 percent, the largest gain since January 2010, after falling 0.3 percent in February.

-- Reuters