Retail sales rose 1.6% in September after falling 0.1% in August following the hit to consumer activity in the hurricane hit states of the south - most notably Texas and Florida.
USA consumer prices recorded their biggest increase in eight months in September as gasoline prices soared in the wake of hurricane-related refinery disruptions, but underlying inflation remained muted.
The increase in gasoline prices was the largest since June 2009 and followed a 6.3 percent rise in August. Core prices had been expected to rise by another 0.2 percent.
Gasoline prices spiked by 13.1 percent due to Hurricane Harvey and accounted for about three-fourths of the increase by the headline consumer price index. Economists had expected prices to increase by 0.6 percent.
The lower monthly core CPI partly reflected a drop back in vehicle and drug prices that are unlikely to be sustained in the months ahead, said Michael Pearce at Capital Economics, so the September CPI report "is unlikely to stop the Fed hiking rates again in December". The shelter index continued to increase, and the indexes for motor vehicle insurance, recreation, education, and wireless telephone services also rose.
The all items index rose 2.2% for the 12 months ending September; the 12-month change has been accelerating since it was 1.6% in June.
"While a December rate hike had seemed a strong probability after last Friday's solid wage growth data, the picture now looks much more finely balanced", said John Dolan, senior dealer at FEXCO Corporate Payments.
He added, "Once those factors fade in early 2018, and against the backdrop of exceptionally tight labor market, we suspect that core inflation will rebound in 2018".
The Labor Department said its producer price index for final demand climbed by 0.4 percent in September after edging up by 0.2 percent in August. The energy index rose 10.1% in the last twelve months.
Spot gold added 0.1 percent to $1,293.37 an ounce. The inflation rate since the beginning of the year (September 2017 compared to December 2016) has been 1.3% and the annual inflation in September 2017 compared to September 2016 was 2.1%.
On a year-over-year basis, it rose by 2.2%, which was above the prior month's reading of 1.9%, but below expectations of 2.3%.