WASHINGTON, April 9 (Reuters) - U.S. producer prices increased more than expected in March, resulting in the largest annual gain in 9-1/2 years, fitting in with expectations for higher inflation as the economy reopens amid an improved public health environment and massive government funding. The producer price index for final demand jumped 1.0% last month after increasing 0.5% in February, the Labor Department said on Friday. In the 12 months through March, the PPI surged 4.2%. That was the biggest year-on-year rise since September 2011 and followed a 2.8% advance in February. Economists called by Reuters had forecast the PPI increasing 0.5% in March and jumping 3.8% year-on-year. The report was delayed after the Bureau of Labor Statistics’ website crashed.