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.

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

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,

Traders of interest-rate futures are now predicting nearly equal chances on Wednesday that the Federal Reserve will lower interest rates twice by the end of this year, according to data compiled by Reuters.