Investors' already-firm expectations rose for a Fed interest-rate increase in March, as the data could help calm an increasingly heated debate among central bank officials over why inflation has stayed relatively placid despite solid economic growth and the lowest unemployment rate since 2000.
The US central bank has scheduled three rate rises this year and these latest figures have seen the pound reach its highest level against the dollar since the European Union referendum.
That was the biggest advance in the so-called core CPI since January 2017 and followed a 0.1 per cent gain in November. The headline inflation accelerated to a 16-month high of 5.21 percent in December.
Ministry of Statistics and Programme Implementation, has revised the Base Year of the Consumer Price Index (CPI) from 2010=100 to 2012=100 with effect from the release of indices for the month of January 2015.
Weak import and producer price data this week had raised concerns about the inflation outlook, although the two reports do not have a strong correlation with the CPI.
PHD Chamber's President Anil Khaitan said that as the "teething problem of GST" have been nearly over, the growth in industry has come with a strong rebound and "we look forward the growth to become more strong in the coming quarters".
Shelter costs rose 0.4% in the month, while medical care increased 0.3% and food was up 0.2%.
The dollar trimmed losses against a basket of currencies after the data.
The rise in the inflation will lead to a spike in bond yields. US stock index futures pared gains.
Rising consumer prices provide further support for central bank policymakers' median expectation of three increases this year in the Fed's benchmark interest rate, which now is at a range of between 1.25 percent and 1.5 percent.
"In terms of industries, 15 out of the 23 industry groups in the manufacturing sector have shown positive growth during the month of November 2017 as compared to the corresponding month of the previous year", the CSO said. The cost of both hospital and doctor visits increased 0.3 percent. Over the past 12 months, overall inflation has risen 2.1 percent, while core inflation is up just 1.8 percent. The cost of motor vehicle insurance increased 0.6 percent.
In December, petrol prices fell 2.7% after rebounding 7.3% in November. Including all items, the broader CPI showed a smaller gain in December in line with estimates, as energy prices declined, a Labor Department report showed Friday.
U.S. energy prices were up sharply a year ago compared to 2016, with petrol rising almost 11% and fuel oil up more than 15%.
Sales last month were supported by a 1.2 per cent jump in receipts at gardening and building material stores. Sales at auto dealerships rose 0.2 percent.
The 2-year rate, sensitive to changes in monetary policy, popped higher to 2.014%, from 1.972% late Thursday, according to Tradeweb.