As seen on CNNMoney.com.

In another indication of growing inflation, wholesale prices increased in July to the highest annual rate in 27 years, according to a government report released Tuesday.

The annual Producer Price Index for finished goods rose 9.8% in the 12 months that ended in July.

The jump in wholesale prices is the fastest rate of increase since a 10.4% bump-up in June 1981, according to Joseph Kowal, economist at the Bureau of Labor Statistics.

The Labor Department also reported that PPI rose 1.2% in July, after increasing 1.8% in June. Analysts polled by Briefing.com had expected an increase of only 0.6%.

The surge in producer prices is in large part due to higher energy prices, said Doug Roberts, chief investment strategist for ChannelCapitalResearch.com.

Crude oil prices doubled in the 12 months through July, but have since fallen nearly 24% from their peak hit last month.

The latest PPI report doesn't reflect the recent drop in crude prices, but Roberts expects future readings to ease.

"The topline is a bit behind the curve - that will fall in the future," he said. "Right now, it has not really taken into account the recent decrease in energy prices."

Core inflation: The so so-called core PPI number, which excludes food and energy prices, rose by 0.7% - more than the 0.2% increase analysts had expected.

The core inflation index is "the more long term rate" because it indicates how much inflation "is seeping into the economy" beyond the volatile energy prices, said Roberts.

The index for finished goods other than foods and energy has advanced by 3.5% in the past year, according to the report.

Food and energy: The indexes that measure producers' food and energy prices increased in July, but at a more moderate pace than in the previous two months.

Energy prices rose by 3.1%, after a 6.0% jump in energy prices in June and a 4.9% jump in May. In the 12 months through July, prices for finished energy goods have surged 28%.

Food prices rose by only 0.3% in July, after increasing by 1.5% in June and 0.8% in May. In a year-over-year comparison, prices for finished consumer foods have increased by 8.7%, according to the report.

The much more moderate increase in food prices in July compared with June is the one bright spot in the otherwise glum inflation report, according to Roberts.

Even though energy prices in July were still on the rise last month, "if you are seeing the other big component of inflation go down a bit, that could indicate a positive for the future," he said.

The government reported last week that the the Consumer Price Index jumped by 0.8% in July, which was twice the increase that economists had expected.