Inflation is proving stickier than expected, which could cause Fed to hit pause button on more interest rate cuts.

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

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. consumer prices increased slightly more than expected in November as energy costs rose, pointing to an inflation trend that lines up with the Federal Reserve's view for a slower path of rate cuts this year.

The Consumer Price Index 0.4% M/M in December, matching the consensus and slightly accelerating from the 0.3% increase in the previous month, according to U.S. Bureau of Labor Statistics data released on Wednesday.