Paul Ashworth, chief US economist at Capital Economics, said that the December report, with a 0.3 per cent rise in core prices, the largest in 11 months, bolstered his view that the Fed will accelerate rate increases this year.
Crude prices have rallied, sending Brent crude above Dollars 70 a barrel on Thursday for the first time since December 2014, a worry that India imports most of its energy needs.
Core inflation, while not the Federal Reserve's preferred inflation measure is still well below the central bank's target of 2%.
The core CPI inflation increased to 4.96% in December 2017 compared with 4.75% in November 2017.
The underlying pace of US inflation unexpectedly accelerated in December amid increased shelter costs, reinforcing the outlook for the Federal Reserve to raise interest rates several times in 2018.
"The rise in housing inflation is likely to be persistent, while rising crude oil prices pose another risk".
French authorities recover jewels stolen from Ritz hotel
The hotel, opened in 1898, has been owned by Egyptian billionaire Mohamed Al-Fayed since 1979. Two accomplices waiting outside were thrown some booty and escaped by vehicle and motorbike.
He said this forecast was based on a view that inflation will begin to show bigger gains in coming months. Economists had expected prices to rise by 0.2%.
Shelter costs rose 0.4% in the month, while medical care increased 0.3% and food was up 0.2%. The December decline was led by a 2.7 per cent drop in the price of gasoline, which had jumped 7.3 per cent in November.
Meanwhile, the report said core consumer prices, which exclude food and energy prices, increased by 0.3% in December after ticking up by 0.1% in November. Owners' equivalent rent of primary residence climbed 0.3% after gaining 0.2% in November.
On Thursday, the Labor Department released a separate report unexpectedly showing a modest decrease in producer prices in the month of December. Data for November was revised to show sales gaining 0.9% instead of the previously reported 0.8% increase.
Excluding food and energy prices, core producer prices still dipped by 0.1% in December following a 0.3% increase in November.