U.S. consumer prices rose 0.6% in September and 3.7% year over year, while core CPI increased 0.3% on the month and 2.6% over the year. Futures put the chance of the Fed holding rates at 49%, up from 19% before the report.
The Consumer Price Index rose 0.6% in September after increasing 0.4% in August, and was up 3.7% from a year earlier after a 3.4% annual gain in August. Economists had forecast a 0.6% monthly increase and a 3.6% annual rise. Gasoline prices surged 7.1% during the month.
Excluding food and energy, CPI rose 0.3% for a second consecutive month. Core inflation was up 2.6% over the year, compared with 2.4% in August. After the release, futures put the probability of the Federal Reserve keeping rates in its 3.75%-4% range at its meeting in two weeks at about 49%, compared with 19% beforehand. Two-year Treasury yields rose 14 basis points to 4.93%, while 10-year yields gained 10 basis points to 5.314%.
Market commentators said the figures put another rate increase back in consideration, though some doubted the report would change expectations for one more increase this year. One investor said energy costs were filtering into other prices, while another described the core reading as above expectations.
