The Labor Department also said unit labor costs rose by 0.6% in the second quarter following an upwardly revised 5.4% spike in the first quarter.
"The slight bias to the upside (in stocks) is a result of the CPI number".
"Geopolitics splashed cold water on the markets", said JJ Kinahan, chief strategist at TD Ameritrade.
Reuters data show a 22 per cent perceived chance for a rate increase after the Fed's December meeting.
Amid the hot rhetoric, US stocks sold off sharply on Thursday, with the S&P 500 falling more than 1 percent.
Chinese Vice Premier in Islamabad to attend Pakistan's I-Day
Wazir Mansion, known as 'Quaid-e-Azam Birthplace Museum, ' was a family home of Jinnah in the district Kharadar of Karachi, Sindh. The day will dawn with thirty-one gun salute in the federal capital and twenty-one gun salute in the provincial capitals.
"There was some skittishness earlier but then some buyers stepped in", he said. "I don't know how you deal with North Korea".
The Stoxx Europe 600 was down 1% in afternoon trade, while futures signaled the S&P 500 would open down 0.2% and the Dow Jones Industrial Average would open 0.1% lower.
Valeant Pharmaceuticals International, Inc. lost 1.58 Canadian dollars (1.24 USA dollars), or 9.4 percent, to 17.89 Canadian dollars (14.09 dollars), after the company said its subsidiaries in Australia were the subject of a tax audit.
In Asia, benchmarks in Hong Kong and South Korea - which had been one of the best performers of 2017 - closed down 2% and 1.7% respectively, Friday, putting the week's drop at 2.5% and 3.2%.
United States markets fell on Wednesday morning, spooked by rising tension between the USA and North Korea.
Japanese markets were closed for a holiday but the yen powered on, hitting an eight-week high of 108.91 yen to the dollar, adding to its biggest weekly gain since May.
A new approach for North Korea's nuclear weapon threat
Trump expressed hope that the US would not have to use this "power", but remained confident in the strength of the country. The United States and North Korea have repeatedly exchanged hard-line rhetoric, as if to show no hesitation to go to war.
However, the S&P Bank sub-sector fell 0.7 percent on dimming prospects of another rate hike this year since higher rates tend to boost bank profits.
The dollar was further weighed down on Friday by the soft United States inflation data.
"Despite all this rhetoric, there is a general feeling that we are not going to go up to the war", said Karl Haeling, holding that this had provided little support to the market.
The Japanese yen last strengthened 0.03 per cent versus the greenback at 109.22 per dollar.
"It's a big move in the context of what we've seen in the course of this year, but in a bigger picture perspective the levels are still relatively moderate", said Harper. Inflation has risen 1.7% over the past 12 months, suggesting that inflation pressures remain well under control. The yield on the 10-year Treasury note slipped to 2.19 percent from 2.20 percent late Thursday.
Gold, another classic safe haven asset, was trading at around $1,285 per ounce, up more than two per cent this week and near a nine-week high. Major U.S. indices had posted record highs in recent weeks.
Incredible win for the Clarets
I have to try to adapt a new system and to anticipate this situation of playing with nine or 10 men in the next game". And it was weird at half time because you have to decide how you're going to approach it from there.
Ongoing global glut concerns lingered in oil markets despite a bigger-than-expected draw in U.S. crude inventories, leaving prices volatile.