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.

Disinflation in key areas of consumer prices should help the Federal Reserve stick to its policy path of gradual cuts to interest rates.

Federal Reserve Bank of Richmond President Tom Barkin said fresh inflation data show the central bank continues to see progress on lowering inflation toward its 2% goal, but that interest rates should remain restrictive.

The Consumer Price Index ticked up by 0.4% in December, but a measure that excludes food and energy prices slowed for the first time in four months, the Labor Department said on Wednesday. Why it matters: Inflation resumed a cooling trend after a months-long interruption,