US inflation beats forecasts, raising odds of Fed rate hike in October or December

US consumer inflation accelerated in September, with rising gasoline prices driving over half the monthly increase, intensifying pressure on the Federal Reserve to continue raising interest rates. The Consumer Price Index rose 0.6% seasonally adjusted, bringing the annual rate to 3.7%, exceeding economist forecasts of 3.6%. Core CPI, excluding volatile food and energy prices, rose 0.3% monthly and 2.6% annually, both above expectations of 0.2% and 2.5%. Energy prices led the surge, with gasoline up 9.1%, while shelter costs rose 0.4%. Market odds for an October Fed rate hike jumped to 43% from 22% before the report. Analysts remain divided on timing, with some expecting a December hike due to volatile energy-related movements from the Iran conflict, while others see October as possible given broad-based core inflation strength. Treasury yields rose to new multi-decade highs following the data release.