The US dollar index was down by 0.3% at 92.77 at 8:53 a.m. ET after being up in the green ahead of the CPI report.
CPI rose 0.5% month-over-month in September, according to the Labor Department. That was above the prior month's reading of 0.4%, but below expectations of a 0.6% uptick.
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%.
The gasoline index rose 13.1% in September, accounting for three-fourths of the seasonally adjusted all items increase, and the food index picked up slightly. The Labor Department added that Hurricane Irma has a "small impact" on the data collection.
Meanwhile, Core CPI rose 0.1% month-over-month in September, below the prior month's reading of 0.2%, and below expectations of 0.2%.
Market watchers were looking to Friday's inflation data for flickers of growth after the minutes of the Federal Reserve's policy meeting in September, which were released earlier this week, showed that many Fed officials are concerned that inflation will remain lower for longer.
Some FOMC members suggested that more secular factors, like the influence of technology on lowering prices, might keep inflation below the Fed's target of 2% for longer. Officials were split on whether to hike rates for the third time this year, which would likely be in December.
In its September Summary of Economic Projections, the FOMC said its inflation expectations continue to slide. It expects core PCE to come in at 1.5% to 1.6% in 2017, down from the previous forecast of 1.6% to 1.7%.
"[I]t's worth noting that the CPI number is not the Fed's preferred measure of inflation but it is released a couple of weeks before the core PCE price index and there is followed closely for signs of price pressures building or declining," Craig Erlam, senior market analyst at OANDA, said in emailed commentary.
The US dollar index is down by nearly 10% from US President Donald Trump's inauguration.
As for the rest of the world, here was the scoreboard at 8:48 a.m. ET:
- The euro was up by 0.3% at 1.1868 against the dollar. Data showed German CPI rose 0.1% month-over-month in September, in line with expectations, while Italian CPI fell 0.3% month-over-month, also in line with expectations.
- The British pound was up by 0.4% at 1.3314 against the dollar. The British Chambers of Commerce said in its Quarterly Economic Survey, an influential business lobby group, said Friday The Bank of England hiking interest rates next month would be an "extraordinary" step and should be avoided given the current economic climate in the UK.
- The Russian ruble was up by 0.7% at 57.3218 per dollar, while Brent crude oil, the international benchmark, was up by 2.0% at $57.34 per barrel.
- The Japanese yen was up by 0.5% at 111.77 per dollar.
- The Indian rupee was up by 0.4% at 64.729 per dollar.