US inflation rises in line with expectations in September

US inflation rose in line with expectations in September, driven by increases in housing and energy prices, official data showed on Tuesday.

The consumer price index jumped 1.5% year-on-year in September, its biggest annualised rise since October 2014 and as expected by analysts, following a 1.1% increase the previous month.

On a month-on-month comparison, CPI edged up 0.3% in September after a 0.2% gain in August, which also matched estimates.

“Today’s US inflation data could prompt Fed Chair Janet Yellen to put her foot on the gas towards raising interest rates sooner rather than later,” said Paul Sirani, chief market analyst at Xtrade.

“Yellen will want to take some of the heat out of the strong economy and clamping down on inflation will surely be a priority, with the December policy meeting looking more and more likely to bring an announcement.”

The Federal Reserve, which holds its next policy meeting on 1-2 November, is targeting 2% inflation.

Meanwhile, core inflation - which excludes volatile food and energy prices - climbed an annualised 2.2% in September after a 2.3% rise in August, missing expectations for an unchanged reading.

On the month core inflation also slowed to 0.1% growth from 0.3%, below forecasts of 0.2%.

The dollar dropped 0.4% versus the euro and 0.90% versus the pound but rose 0.5% against the yen at about 1343 BST.