(Corrects headline to February) WASHINGTON, March 12 (Reuters) - U.S. producer prices increased strongly in February, leading to the largest annual gain in nearly 2-1/2 years, but considerable slack in the labor market could make it harder for businesses to pass on the higher costs to consumers. The producer price index for final demand rose 0.5% last month, the Labor Department said on Friday. That followed a 1.3% jump in January, which was biggest advance since December 2009. In the 12 months through February, the PPI surged 2.8%, the most since October 2018. The PPI increased 1.7% year-on-year in January. Economists polled by Reuters had forecast the PPI gaining 0.5% in February and jumping 2.7% year-on-year. (Reporting by Lucia Mutikani; Editing by Alex Richardson)