US inflation hits 3.7% in September, exceeding forecasts

US inflation rose to 3.7% year-over-year in September, up from August's 3.4% and above market forecasts, according to the Bureau of Labor Statistics. The monthly CPI increased 0.6%, while core CPI, excluding food and energy, rose 2.6% annually. The higher-than-expected reading strengthened the US dollar, pushing the Dollar Index above 102.00 as Treasury yields climbed. Core CPI monthly rose 0.3%. The data could influence Federal Reserve policy decisions, with markets currently pricing an 80% probability of a rate hold at the upcoming meeting. Rising diesel prices, up about 14% in September, contributed to inflation pressures. Analysts note diesel price changes explain roughly 70% of variation in US inflation surprises, with a 1% annual increase associated with a 0.06 percentage point rise in inflation surprises.