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

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.

Key Takeaways The Consumer Price Index rose 2.9% in December, accelerating from a 2.7% annual increase in November.Core inflation rose 3.2% over the year, down from 3.3% in November, providing optimism for the trajectory of the cost of living.

There have been some troubling signs of inflation expectations picking up. The University of Michigan’s gauge of consumer expectations for price rises over the coming 5 to 10 years jumped to 3.3% in the preliminary January reading -- the highest since 2008.

Financial writer analyzes December CPI report showing inflation above target, speculates on future trajectory and Federal Reserve policy path. Click for more.