The Labor Department's Producer Price Index, which measures prices at the factory door, climbed 1.2 percent after a 1.8 percent gain in June. But so-called core producer prices, which exclude food and energy, jumped 0.7 percent in July after a 0.2 percent June increase.

It was the fastest rise in monthly core producer prices since November 2006 and implied that price gains were spreading outside the food and energy sectors, which is certain to concern Federal Reserve policy-makers who want to prevent price pressure from gaining too strong a foothold.

(Reporting by Glenn Somerville; Editing by Neil Stempleman)