WASHINGTON (Reuters) - U.S. producer prices barely rose in April after strong gains in the first quarter, held down by a moderation in the cost of both goods and services, which could ease fears that inflation pressures were rapidly building up.

FILE PHOTO: A Boeing worker is pictured in the wing system installation area at their factory in Renton, Washington, U.S., February 13, 2017. REUTERS/Jason Redmond/File Photo

The slowdown in wholesale price growth reported by the Labor Department on Wednesday is likely temporary as manufacturers have been reporting paying more for raw materials. Economists also expect oil prices to surge after President Donald Trump on Tuesday pulled the United States out of an international nuclear deal with Iran.

“Inflation isn’t breaking out, although with Trump exiting the Iran nuclear deal, higher energy prices could kick-start a new round of inflation at the producer level,” said Chris Rupkey, chief economist at MUFG in New York.

The Labor Department said on Wednesday its producer price index for final demand edged up 0.1 percent last month after increasing 0.3 percent in March. That lowered the year-on-year increase in the PPI to 2.6 percent from 3.0 percent in March.

Economists polled by Reuters had forecast the PPI gaining 0.2 percent last month and rising 2.8 percent from a year ago.

A key gauge of underlying producer price pressures that excludes food, energy and trade services also nudged up 0.1 percent last month. The so-called core PPI had increased by 0.4 percent in each of the past three months.

In the 12 months through April, the core PPI rose 2.5 percent after jumping 2.9 percent in March. Core goods prices increased 0.3 percent in April, matching March’s gain.

Stocks on Wall Street were trading higher, with shares

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