US inflation increased slightly in October to reach 1.6 per cent year on year, continuing a steady upward trend in the second half of the year. Inflation increased by 0.1 per cent, with petrol prices and housing making the largest contributions.
The overall energy sector increased 3.5 per cent, its largest increase since February 2013, according to data released today by the US Bureau of Labor Statistics. Petrol prices were the main driver of the rise, as higher oil prices increased the fuel oil and gasoline indexes by 5.9 per cent and seven per cent respectively.
The rise just beat analyst expectations - by 0.1 percentage points. The rate had been expected to stay stable from September's figure of 1.5 per cent.
The increase in inflation will likely strengthen the case further for an interest rate rise by the Federal Reserve at their December meeting, after Janet Yellen said today that a rise will come “relatively soon”.
“After US manufacturing output increases were released on Wednesday, similar results for inflation today mean the stage is set for Fed chair Janet Yellen’s interest rate hike next month,” said Dennis de Jong, managing director at UFX.
US inflation has now doubled since July of this year from 0.8 per cent.