Surging food and energy costs led to the biggest monthly gain in U.S. wholesale prices in more than a year in April, but most other price rises were muted, the Labor Department (search) said on Thursday.

The Producer Price Index (search), a measure of prices paid to farms, factories and refineries, soared 0.7 percent last month, the largest increase since a 1.3 percent spike in March 2003, the Labor Department said.

However, stripping out volatile food and energy prices, the so-called core PPI advanced a mild 0.2 percent, it said.

Wall Street economists had expected overall producer prices to gain just 0.3 percent, but their forecasts for the core index were spot on.

Energy prices gained a hefty 1.6 percent last month, accounting for the acceleration in wholesale prices from the already large 0.5 percent increase seen in March. Gasoline prices rose 3.4 percent in April and residential natural gas was up 2.5 percent.

Energy prices have risen sharply in recent months, reflecting an upward march in the international price of crude oil amid rising global demand, tight U.S. supplies and jitters over the potential for a supply disruption in the Middle East.

U.S. light sweet crude (search) oil prices hit a high of $38.30 a barrel in April and have since climbed further. On Wednesday, prices surged to a session high of $40.92, just 23 cents shy of the all-time high of $41.15 reached in October 1990 after Iraq invaded Kuwait. Prices settled at $40.77, a record-high close.

But energy has not been the sole culprit behind rising U.S. wholesale prices.

Food prices climbed 1.4 percent last month, on the back of a sharp 1.5 percent increase in March. Dairy product prices posted their biggest gain since July 1946.

The mild rise in core wholesale prices should help moderate any inflation worries spiking energy and fuel costs might foster.

Nevertheless, core producer prices have risen 1.5 percent over the last 12 months, the biggest such gain since the period ended August 2001.