A key economic report next Wednesday is expected to show that progress in reducing inflation has stalled, although not so much that the Federal Reserve will not cut interest rates next week.

The consumer price index, a broad measure of the cost of goods and services across the U.S. economy, is expected to show a 12-month inflation rate of 2.7% in November, an acceleration of 0.1 percentage point from the previous month, according to Dow would Jones consensus.

Excluding food and energy, so-called core inflation is expected to be 3.3%, unchanged from October. A monthly increase of 0.3% is forecast for both indicators.

With the Fed targeting 2% annual inflation, the report will provide further evidence that the high cost of living for U.S. households remains a fact.

“When you look at these measures, there is nothing there that suggests the inflation dragon has been slain,” said Dan North, senior economist at Allianz Trade Americas. “Inflation is still there and shows no convincing steps towards 2%.”

Along with consumer price data released on Wednesday, the Bureau of Labor Statistics will release its producer price index, a measure of wholesale prices, on Thursday that is expected to post a monthly increase of 0.2%.

Certainly, inflation has fallen significantly since its CPI cycle peak of around 9% in June 2022. However, the cumulative impact of the price increases has been a burden on consumers, particularly those at the lower end of the wage scale. The core CPI has been trending upward since July after posting a steady series of declines.

Still, traders in futures markets are betting big that policymakers will cut their benchmark short-term lending rate again by a quarter of a percentage point when the Federal Open Market Committee concludes its meeting on Dec. 18. The probability of a reduction was almost 88%. on Tuesday morning, according to CME Group’s FedWatch gauge.

“When the market is as stuck as it is today, the Fed doesn’t want to cause a big surprise,” North said. “So unless something has shot up that we didn’t foresee, I’m pretty sure the Fed is in trouble here.”

November’s CPI increase is likely due to a few key areas, according to Goldman Sachs.

Car prices are expected to rise 2% monthly, while airfares are expected to rise 1%, the company’s economists predicted in a note. Additionally, the encouraging rise in auto insurance is likely to continue, rising 0.5% in November after a 14% rise last year, Goldman estimated.

While the company “expects a further decline in inflation over the next year” due to easing in the auto and home rental categories as well as a weakening labor market, it also fears that President-elect Donald Trump’s planned tariffs could keep inflation high in the year 2025.

Goldman expects core consumer price index inflation to fall next year, but only to 2.7%, while the Fed’s target inflation indicator, the personal consumption expenditures price index, will rise to 2.4% from 2.8% recently .

With inflation expected to be well above 2% and macroeconomic growth remaining around 3%, this would not normally be an environment in which the Fed would cut rates. The Fed is using higher interest rates to curb demand, which would theoretically force companies to lower prices.

Markets expect the Fed to skip the January meeting and then potentially cut rates again in March. From then on, market prices foresee only one or at most two cuts for the remainder of 2025.

“For me, two percent doesn’t mean just hitting the 2 percent mark and moving on. It means hitting the 2 percent mark for a continuous, foreseeable future, and none of that is apparent in any of these reports,” North said. “You don’t really want to perform in this environment.”