By Alicia Wallace, CNN

(CNN) — Recently, progress on inflation appeared to be stuck or, at worst, reversing: A closely watched gauge of underlying price hikes — an index that excludes highly volatile categories — hadn’t budged for months.

On Wednesday, it got unstuck.

The closely watched core measurement of the Consumer Price Index slowed for the first time in months, according to Bureau of Labor Statistics data released Wednesday. That reading, coupled with some better-than-expected wholesale inflation data received on Tuesday, spurred optimism in the markets.

US stock futures spiked Wednesday morning, as the CPI report boosted traders’ hopes that the Federal Reserve will continue its rate-cutting campaign this year. Futures on the Dow rose by more than 600 points. Futures on the S&P moved up by 1.5% and Nasdaq futures were higher by 1.8%.

Overall, the Consumer Price Index did increase more than anticipated, rising 0.4% from November and jumping 0.2 percentage points to annual rate of 2.9%. However, the increase was largely driven by gas and food prices.

Energy prices, particularly gas and fuel costs, accounted for 40% of the overall monthly increase. Food prices also remained elevated as key staples such as meat and eggs continued to face pressures from weather and disease, respectively.

However, in the context of inflation measures, energy and food are two of the most volatile categories and can exhibit wild swings because of factors considered one-time in nature.

Excluding energy and food, the closely watched core CPI gauge slowed for the first time in months, rising just 0.2% from November and easing to 3.2% after staying stuck at 3.3% since September 2024.

Wednesday’s report marked the final CPI reading for 2024 and the last before President Joe Biden hands the keys over to President-elect Donald Trump. While the causes of this recent bout of inflation were multifaceted and largely related to the Covid-19 pandemic and its fallout, the sharp rise in prices hit Americans hard and proved to be a critical factor at the ballot box.

Economists were expecting inflation to pick up 0.3% from November and notch a 2.8% annual increase, primarily due to expectations around higher energy and food prices.

The CPI measures price changes across commonly purchased goods and services.

This story is developing and will be updated.

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