Prices at the wholesale level surged in April, with the Producer Price Index showing a 0.6% increase from the month before and the largest gain since September 2012, according to the U.S. Labor Department.

This follows a 0.5% jump in March and 0.1% decline in February.

Compared to a year ago the index is up 2.1%, the biggest 12-month gain since March 2012.

Food prices skyrocketed 2.7% from the month before during April, the fourth straight monthly increase and the biggest gain since February 2011, following a 1.1% increase in March. It was led by a surge in meat prices, posting its biggest monthly gain in nearly 11 years.

When the volatile food and energy sectors are removed, the PPI increased 0.5% in April, following a 0.6% increase in March. Over the past 12 months the “core PPI” is up 1.9%, the biggest increase since December 2012.

Goods prices rose 0.6% in April after coming in flat in March, while service costs also rose 0.6% in April, a tenth of a percent below last month’s increase, while energy prices rose just 0.1%

“A benign inflation report with a hint of price pressure in the pipeline,” is how Sterne Agee Chief Economist Lindsey Piegza described the report. “Despite the monthly rise, however, the annual gain remains well in line with the Federal Reserve target and well below the Fed's threshold, meaning the Fed's focus is likely to remain firmly on reducing the slack in the labor market.”

In other words, yesterday's disappointing retail sales report showing a loss of momentum on part of the consumer, thanks to lackluster job creation and minimal income growth, she said, will take precedence in the Fed's mind over this morning's larger-than-expected monthly PPI report.