US wholesale prices rose twice as fast as expected last month as new home construction plunged, government data showed on Tuesday, offering little reason for optimism on the outlook for either inflation or the ailing housing market.

The producer price index, which was forecast to jump by 0.6 per cent in July, instead gained 1.2 per cent, disappointing economists looking for signs of a quick easing in inflationary pressures. The data echoed the release of the consumer price index last week, which also increased twice as much as expected – by 0.8 per cent.