Analysts on average had forecast PPI would slip 0.1 percent.
Prices of services rose 0.4 percent in August, driven largely by rising retailing costs in apparel, footwear and accessories.
Goods prices fell 0.6 percent, the steepest drop since April, as energy prices tumbled 3.3 percent. Gasoline prices dived 7.7 percent and heating fuel lost 11 percent.
Food prices rose 0.3 percent. Egg prices surged 23.2 percent after an avian flu epidemic forced the destruction of flocks of chickens several months ago.
Excluding food and energy, which can be volatile month on month, producer prices rose 0.3 percent for the third consecutive month.
The wholesale inflation data came ahead of the Federal Reserve's monetary policy meeting next Wednesday and Thursday. The central bank is weighing whether the economy is strong enough to weather an increase in its benchmark interest rate, pegged at zero since late 2008.
While other aspects of the economy show improvement, such as the jobs market, overall inflation has remained muted, below the Fed's 2.0 percent target for price stability.
"If the Fed is looking for evidence that inflation is back on track for two percent, this report does not go in that basket," said Robert Brusca of FAO Economics.
"In addition, global commodity prices remain weak and falling and oil prices are slipping again; the dollar remains strong and that should depress inflation in the US."