US producer prices increased more than expected in September amid a surge in the cost of hotel and motel accommodation, leading to the first year-on-year gain since March. The report from the Labor Department on Wednesday, which also showed a jump in prices for iron and steel scrap, suggested a slowdown in inflation flagged by data on Tuesday would likely be moderate. Consumer prices slowed in September as supply chain disruptions caused by the COVID-19 pandemic eased. The producer price index for final demand rose 0.4% last month after advancing 0.3% in August. In the 12 months through September, the PPI increased 0.4% after falling 0.2% in August. Economists polled by Reuters had forecast the PPI would gain 0.2% in September and rebound 0.2% on a year-on-year basis. Excluding the volatile food, energy and trade services components, producer prices increased 0.4% in September. The so-called core PPI had increased by 0.3% for three straight months. In the 12 months through September, the core PPI climbed 0.7%. The core PPI rose 0.3% on a year-on-year basis in August. US stock index futures were trading slightly higher. The dollar slipped against a basket of currencies. US Treasury prices were mostly higher. SERVICES, GOODS RISE The government reported on Tuesday that consumer prices increased 0.2% in September, with a 6.7% jump in prices for used cars and trucks accounting for most of the gain. Business closures to slow the spread of the coronavirus caused bottlenecks in the supply chain, pushing up prices of some goods. Many businesses are now operational, but excess capacity in the labor market is limiting their ability to raise prices. Tame inflation should allow the Federal Reserve to keep interest rates near zero for a while and continue pumping money into the economy, which slipped into recession in February. The US central bank is now more focused on the labor market and has embraced flexible average inflation targeting, which in theory could see policymakers tolerate price increases above the Fed’s 2% target for a period of perhaps several years to offset years in which inflation was lodged below that goal. The Fed’s preferred inflation measure, the core personal consumption expenditures (PCE) price index, rose 1.6% in the 12 months through August. September’s core PCE price index data is scheduled to be released at the end of this month. With new coronavirus infections surging across the United States and the economic recovery showing signs of stress, inflation could remain tepid. At least 25.5 million people are on unemployment benefits.