U.S. headline inflation accelerates in October on increased energy prices

U.S. consumer price inflation accelerated in October, mainly due to increased energy prices. On a sequential basis the headline inflation accelerated to 0.3 percent, coming in line with expectations. Core rate, which excludes food and energy, rose modestly by 0.2 percent, also on top of the median consensus estimate.

On a year-on-year basis inflation accelerated to 2.5 percent, accelerating from 2.3 percent. In the meantime, core rate dropped slightly to 2.1 percent from 2.2 percent. Core goods prices were up 0.3 percent sequentially, reversing a drop of 0.3 percent in the prior month, while core services were up softly by 0.2 percent, slowing down a bit from the previous two months.

Given the decline in oil prices in recent weeks, the increase in energy prices in October is expected to have been in reversed in November, taking some steam out of headline inflation. The hint from core prices was mixed in October. While core goods prices picked up speed, this was countered by a slower pace of services growth, noted TD Economics in a research report.

Inflation is expected to move higher in the year ahead. Tariffs are not yet making an obvious mark on inflation, but with more likely in train, it is only a matter of time before they come through in higher consumer prices, stated TD Economics.

At 15:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -109.206. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex