UNITED States consumer prices accelerated in June and underlying inflation pressures showed signs of stabilizing, keeping on track expectations the Federal Reserve will start tapering its bond purchases later this year.

Other data yesterday showed industrial production pushed higher in June as manufacturing output found some momentum, raising hope a recent slowdown in factory activity was either over or close to running its course.

The Labor Department said its Consumer Price Index increased 0.5 percent, the largest rise since February, after nudging up 0.1 percent in May. Gasoline prices accounted for about two thirds of the increase in the CPI.

Economists had expected consumer inflation to increase 0.3 percent last month.

In the 12 months through June, consumer prices advanced 1.8 percent after rising 1.4 percent in May. It was also the largest gain since February.

Stripping out volatile energy and food, consumer prices increased 0.2 percent for a second straight month. That took the increase over the 12 months to June to 1.6 percent, the smallest increase since June 2011. The so-called core CPI had increased 1.7 percent in May.

While both inflation measures remain below the Federal Reserve's 2 percent target, details of the report suggested the recent disinflation trend was fading, with medical care costs rising. Prices for new motor vehicles, apparel and household furnishings also increased.

Fed Chairman Ben Bernanke, who last month said the central bank would start cutting back the US$85 billion in bonds it is purchasing each month to keep borrowing costs low, has viewed the low inflation as temporary and expects prices to push higher.

Alan Ruskin, an analyst at Deutsche Bank in New York, said the report should "counter arguments that there is a material deflation risk."

In a separate report, the Fed said output at the nation's factories, mines and utilities rose 0.3 percent last month after a flat reading in May. The increase reflected a 0.3 percent rise in manufacturing output.

Economists said it suggested some pickup in economic activity at the end of the second-quarter.

"If manufacturing growth is on the verge of accelerating into the second half of the year, this, along with solid gains in housing, should support growth in the second half of 2013," said John Ryding, chief economist at RDQ Economics in New York.