Markets cheered a December inflation report that suggested underlying price pressures are easing, but the Federal Reserve still isn’t likely to cut interest rates anytime soon given President-elect Donald Trump’s plans for the economy.

The Labor Department's inflation report for the month of December showed that food and energy prices were the primary drivers of stubborn inflation experienced by consumers.

The Consumer Price Index rose 2.9 percent from a year earlier, but a measure of underlying inflation was more encouraging.

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

Inflation probably picked up in late 2024, fueled by robust household spending amid a strong economy. A key gauge of inflation — the consumer price index — is expected to show Wednesday morning that prices rose by 2.

U.S. inflation picked up last month as prices rose for gas, eggs, and used cars, yet underlying price pressures also showed signs of easing a bit. Wednesday’s report from the Labor Department showed that the consumer price index rose 2.

Excluding the volatile food and energy categories, so-called core inflation declined to 3.2%, after remaining stuck at 3.3% for three months in a row.

US inflation continued to heat up at the end of 2024. The consumer price index rose by 2.9% year over year in December, above November's 2.7% rate.