The consumer-price index, measuring what Americans pay for everything from groceries to theater tickets, advanced 0.5% in September from a month earlier, the Labor Department said Friday.
Excluding food and energy prices, core consumer prices inched up by 0.1 percent in September after edging up by 0.2 percent in August. The index rose 1.7% for the 12 months ending in September.
Excluding food and energy prices, core producer prices still rose by 0.4 percent in September after inching up by 0.1 percent in August.
The pan-European FTSEurofirst 300 index .FTEU3 rose 0.22 percent and MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.24 percent. Hurricane Harvey, which made landfall in late August, temporarily shut Texas refineries, and Hurricane Irma caused additional disruptions in Florida last month.
The Dow Jones Industrial Average fell 17.09 points, or 0.07 percent, to 22,855.8, the S&P 500 lost 2.1 points, or 0.08 percent, to 2,553.14 and the Nasdaq Composite dropped 2.41 points, or 0.04 percent, to 6,601.14.
"With growth and the domestic economy booming, wages recently increasing, Fed officials appeared hawkish running into year-end, and understandably so".
Economists surveyed by The Wall Street Journal expected a 0.6% gain in overall prices and a 0.2% increase in core prices. The inflation rate since the beginning of the year (September 2017 compared to December 2016) has been 1.3% and the annual inflation in September 2017 compared to September 2016 was 2.1%.
Ten-year yields had jumped to 2.402 percent on October 6, their highest level since May 11, after the government's employment report for September showed a rise in wages that boosted expectations for rising inflation.
Friday's report showed gasoline prices rose 13.1% last month, the largest one-month increase since June 2009. "The Fed has pointed to inflation bouncing back, and there is no data to support that at the moment".
"We're seeing positive economic news even in the midst of so called geopolitical risk, I think investors are generally more optimistic right now", said Craig Erlam, senior market analyst at OANDA, referring to strong corporate earnings. But that hasn't fully translated directly into higher USA consumer prices, in part because technology is allowing Americans to find lower-cost products and wage pressures remain largely in check. US crude jumped 2 percent to $51.59 a barrel. 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.