US consumer prices recorded their biggest increase in six months in October on rising fuel costs and rents, suggesting a pick-up in inflation that potentially clears the way for the Federal Reserve to raise interest rates in December.
Prospects for a rate hike next month also got a boost from other data showing first-time applications for unemployment benefits tumbling to a 43-year low last week and housing starts surging to a nine-year high in October.
The reports painted an upbeat picture of the economy early in the fourth quarter and came as Fed Chair Janet Yellen said the US central bank could raise borrowing costs "relatively soon".
The Labour Department said its Consumer Price Index increased 0.4% last month after rising 0.3% in September.
In the 12 months through October, the CPI advanced 1.6%, the biggest year-on-year increase since October 2014. The CPI increased 1.5% in the year to September.
Underlying inflation continued to slow last month as healthcare costs moderated after recent hefty gains. But with rents pushing higher, that trend is unlikely to be sustained.
The so-called core CPI, which strips out food and energy costs, climbed 0.1% last month after a similar gain in September.
That slowed the year-on-year increase in the core CPI to 2.1% from a 2.2% rise in September.
The Fed has a 2% inflation target and tracks an inflation measure which is currently at 1.7%.
Yellen addressing Congress
The election of Donald Trump as US president has done nothing to change the Federal Reserve's plans for a rate increase "relatively soon," Fed Chair Janet Yellen said.
The head of the US Central Bank was giving testimony before Congress that included a pledge to serve out her full term.
Ms Yellen said the US central bank would change its outlook as necessary as the new administration rolls out its plans.
They could include hundreds of billions of dollars in tax cuts and additional government spending.
She also suggested the new government keep in mind that the United States is near full employment and inflation may be rising.
"Markets are anticipating a fiscal package that involves a net expansionary stance of policy and that in a context of an economy that is operating reasonably close to maximum employment with inflation heading back to 2%," Janet Yellen said.
There had been some uncertainty about how Ms Yellen would interact with a new president who spoke favourably of the Fed's low rate policies, and yet also accused the Fed of acting politically to help Democratic nominee, Hillary Clinton.
While the election has not affected matters yet, they may find themselves at odds if Mr Trump, for example, pursues a roll-back of financial regulations.
