Consumer Price Index showed an acceleration to 2.9%, the highest rate since July. With such high inflation, the Fed is unlikely to cut rates in January.

U.S. inflation likely worsened last month on the back of higher prices for gas, eggs, and used cars, a trend that could make it less likely that the Federal Reserve will cut its key interest rate much this year.

Traders are feeling more confident that the Federal Reserve will cut interest rates this year after a key inflation gauge came in cooler than expected. Core consumer prices, which exclude volatile food and energy categories,

Annual inflation ticked up for a third straight month in December as food, energy costs rose, CPI report showed. But underlying price measure eased.

US consumer prices showed no signs of cooling in December amid higher costs for energy goods — pointing to still elevated inflation that aligns with the Federal Reserve’s projections for fewer interest rate cuts this year.