United States retail sales rose in September, overcoming the negative impact in the previous month from Hurricanes Harvey and Irma.
"I$3 t's worth noting that the CPI number is not the Fed's preferred measure of inflation but it is released a couple of weeks before the core PCE price index and there is followed closely for signs of price pressures building or declining", Craig Erlam, senior market analyst at OANDA, said in emailed commentary.
Much of the rise was due to a sharp rise in gasoline prices.
Excluding food and energy prices, core producer prices still rose by 0.4% in September after inching up by 0.1% in August.
Excluding food and energy prices, core consumer prices inched up by 0.1% in September after edging up by 0.2% in August.
Some Fed officials have been waiting for signs of rising inflation-coupled with low unemployment and steady job growth-before raising interest rates again. Over the past 12 months, food prices are up 1.2%. Hurricane Harvey, which made landfall in late August, temporarily shut Texas refineries, and Hurricane Irma caused additional disruptions in Florida last month.
Earlier this week, the FOMC Minutes stated that Members are to assess upcoming inflation data in the months ahead. Officials were split on whether to hike rates for the third time this year, which would likely be in December. These increases more than offset declines in the indexes for new vehicles, household furnishings and operations, medical care, and used cars and trucks. But that hasn't fully translated directly into higher US consumer prices, in part because technology is allowing Americans to find lower-cost products and wage pressures remain largely in check.
With the unexpected increase, the consumer sentiment index surged up to its highest level reaching 103.8 in January of 2004.
USA crude fell 1.29 percent to $50.64 per barrel and Brent was last at $56.32, down 1.09 percent. Based on the Labor Department data, it's expected that the Social Security Administration will announce a roughly 2.0% increase in monthly benefit payments next year.