US figures on rebound following hurricanes

US CONSUMER prices recorded their biggest increase in eight months in September as gasoline prices soared in the wake of hurricane-related production disruptions at oil refineries in the Gulf Coast area, but underlying inflation remained muted.

The mixed report from the Labor Department on Friday comes as Federal Reserve officials have been engaged in a vigorous debate on the inflation path and suggests a December interest rate increase is not a done deal.

As a result, the dollar fell against a basket of currencies, while prices for US Treasuries rose. Stocks on Wall Street rose to record highs.

Policymakers could, however, find solace from another report indicating that the economy was swiftly recovering from the damage inflicted by Hurricanes Harvey and Irma, with a strong rebound in retail sales last month.

“The firmness in retail sales should override the enduring mystery of low inflation to spur a December Fed rate hike,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto.

The Labor Department said its Consumer Price Index rose 0.5 per cent last month after advancing 0.4 per cent in August.

September’s rise was the biggest since January and pushed up the year-on-year gain in the CPI to 2.2 per cent from 1.9 per cent in August.