The Labor Department said its producer price index (PPI) jumped 0.3 percent in January, while the core rate, which excludes volatile food and energy costs, soared 0.8 percent.

The headline PPI figure was in line with forecasts, but the core rate was sharply higher than the 0.2 percent expected by private forecasters and was the fastest pace since late 1998.

In the past 12 months, the overall PPI was up 4.2 percent and the core PPI was up 2.7 percent, the biggest year-over-year gain in nine years.

The latest figures sparked fresh concern about inflation, which has been largely in check in recent years. Some experts said the trend, if it continues, may force the Federal Reserve to push up interest rates at a more aggressive pace.

"Today's inflation report illustrates a plausible if not compelling case that recovery is gradually ushering in price pressures," said Citigroup economist Robert DiClemente.

Other experts said the figure prompts a reassessment of the economic picture.

"This is an important warning not to become complacent about the containment of inflation risks," said John Lonski, economist at Moodys Investors Service.

"Investors need to look for higher short-term and long-term interest rates in the months ahead."