FXStreet (Mumbai) - The Labor Department today reported the U.S. Consumer Price Index increased 0.2 per cent in October, after having decline for two straight months. In September the index had dropped to 0.2 per cent drop. U.S. consumer prices rose in October on increased cost of gasoline and a host of other goods rose. The figures imply that the factors holding inflation down like a strong dollar and lower oil prices was beginning to ebb. Economists polled by Reuters had forecast the CPI rising 0.2 per cent in October and moving up 0.1 per cent from a year ago. Prices seem to have stabilized Core CPI gained 0.2 per cent in October on increase in rents and medical costs. In the 12 months through October, the core CPI increased 1.9 per cent. The personal consumption expenditures price index, excluding food and energy, is lower than the core CPI. The rise in dollar vis-a-vis the currencies of its main trading partners has weighed on prices of apparel and automobiles, resulting in a dip in personal consumption expenditures price index. Spelling good news for policy makers, gasoline prices rose 0.4 per cent after falling 9.0 per cent in September. There were also increases in the cost of electricity. Food prices registered a small 0.1 per cent increase marking the smallest gain since May. It had risen 0.4 per cent in September. Four of the six major grocery store food group indexes increased in October. The rental index also increased 0.3 per cent. Hospital costs increased 2.0 per cent while medical care costs rose 0.7 per cent. Airline fares rose 1.5 per cent, after three consecutive declines. Recreation costs increased as well. However apparel prices recorded their biggest decline since December. Possibility of rate hike in December now increases The consumer price index data makes the 2 per cent inflation target of the Fed look achievable. The jobless rate as highlighted by the employment data earlier in the month now falls within the range that the Fed considers consistent. In October 271,000 jobs were added. In the given situation, tightening of labor market conditions along with full employment will raise wages. In the process the money to spare will increase and consumption will receive a boost. Inflation will then gradually move towards target. Inflation had remained stubbornly low causing the U.S. Federal Reserve to hold rates. The October inflation data that came close on the heels of the robust October data is likely to tilt the balance in favour of a rate hike at the Fed’s December meeting. For more information, read our latest forex news.