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 moved up for a third month in a row, rising two-tenths of a percentage point to 2.9% for the year ending in December, adding to signs that the Federal Reserve may have to keep interest rates higher for longer.

Wednesday’s report from the Labor Department showed that the consumer price index rose 2.9 percent in December from a year ago, the highest since July, up from 2.7 percent in November. It was the third straight increase after inflation fell to a 3 1/2 year low of 2.4 percent in September.

This contradicts months of claims from Jerome Powell who has insisted that price inflation was rapidly returning to the Fed's two-percent price inflation goal.

There are growing concerns about the stickiness of inflation and fears that the Federal Reserve may have to keep interest rates restrictively high for longer.

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

This contradicts months of claims from Jerome Powell who has insisted that price inflation was rapidly returning to the Fed's two-percent price inflation goal.

The drop in yields occurred as traders resumed betting on another Fed rate cut by July. Traders ignored the strong December employment data released Friday, which sparked a surge toward the highest levels in months as it sowed doubts that policymakers would cut rates at all this year.

President-elect Donald Trump is set to inherit inflation at a 5-month high. According to the Labor Department, consumer prices rose 2.9% year-over-year and 0.4% month-over-month in December, the largest gains in overall prices in months.