Inflation Topped Expectations in September. The Annual Rate Stands at 3.7%.

Consumer prices rose above expectations in September, increasing 0.6% compared to the previous month, according to the latest figures.

The Bureau of Labor Statistics noted that the annual figure stood at 3.7%, compared to the 3.6% expected by analysts.

More than half of the increase was explained by gas prices, which rose more than 9% last month.

"The energy index increased 5.2 percent over the month following a 2.1-percent increase in August. The shelter index rose 0.4 percent in September after rising 0.3 percent in August. The index for food was unchanged in September, as the index for food away from home increased 0.2 percent and the index for food at home fell 0.1 percent," BLS detailed.

Odds of a rate hike by the Federal Reserve climbed after the report. They stand at 56.3% for the October meeting, compared to 77.9% on Tuesday, according to the CME Group's FedWatch tool.

New ​York Federal Reserve President John Williams reiterated on Tuesday his view that the central bank should hike rates once more this year and leave them unchanged next year, at least considering the current scenario.

"I don't think at this time I have any reason to believe that we would need to do ​more," Williams added in an interview with Bloomberg News. "it's still mid-October. This economy is being affected by lots of different ​influences, and we just have to keep watching the data."

Inflation is also impacting consumer sentiment, which hit a five-month low in October after dropping further over the first days of the month.

The survey of consumers from the University of Michigan showed the figure at 46.3, compared to 48.1 last month. It is also a 13.6% drop compared to the same month last year.

Surveys of Consumers Director Joanne Hsu detailed in a statement that "buying conditions for durables plummeted amid high prices and borrowing costs."

Looking at the partisan divide, she noted that "increases in sentiment among Democrats and Republicans were offset by a decline among independents this month."

"Overall, sentiment for lower-income consumers and those with smaller stock porfolios dropped steeply this month, groups that have fewer resources to weather increases in prices. Frustration over cost-of-living continues to mount, as consumers across the political spectrum believe that the trajectory of the economy has weakened since the beginning of the year," she added.