Consumer price growth accelerated in December, a sign that President-elect Donald Trump will inherit the inflation problems that have plagued the Biden administration when he retakes the White House next week.

The Bureau of Labor Statistics reported Wednesday that the annual inflation rate – which is calculated based on prices compared to a year ago – rose to 2.9% from 2.7% in November.

On a monthly basis, the rate rose to 0.4%, up from 0.3% in the previous month and above expectations.

Even as the broader inflation index picked up, a measure that excludes volatile food and gas items rose less than expected. This so-called “core” reading is closely watched by investors.

Stock futures jumped following the report’s release, with the Dow Jones Industrial Average expected to open nearly 700 points higher and the S&P 500 and Nasdaq rising more than 1.5%.

Traders were also encouraged by the accommodation category, which posted its smallest 12-month increase since January 2022. This component, which measures multiple changes in rental price growth, had not declined significantly for many months.

Some market analysts said the core surprises in Wednesday’s report signaled choppy conditions as Trump takes office.

“Markets are likely to be in turmoil over the next data releases as investors look for a narrative they can be comfortable with for more than just a few days at a time,” said Seema Shah, chief strategist at Principal Asset Management, in a note.

On Friday, the BLS reported that the country added 256,000 jobs last month, significantly exceeding expectations and suggesting that U.S. economic growth is not only remaining stable but may also be strengthening.

Trump was reelected in part to maintain the economic momentum established during the Biden administration. Proof of this is gross domestic product numbers that consistently exceeded expectations and stock prices that shot to all-time highs.

However, this growth has come at the expense of several years of rising inflation, not to mention higher borrowing costs for the United States and higher interest rates for consumers.

If these conditions persist, they could upend Trump’s economic policy agenda, which many mainstream economists believe could lead to further price increases.

“Markets initially celebrated the election results, but the party was less celebratory than in 2016-17,” BCA Research said in a note to clients on Monday. “Macroeconomic conditions are no longer as forgiving of deportations, inflation and tariffs as they were eight years ago, and the new government could face a tougher journey than its first round.”

Markets responded to the threat of further price increases by punishing stock and bond investors alike. The initial surge in stock prices that accompanied Trump’s election in November has been almost completely wiped out.

Meanwhile, U.S. borrowing costs, already under pressure from soaring debt issuance, have hit new highs, while the Federal Reserve has signaled it plans to keep its key interest rate high in response to threats of further price hikes.

Trump’s tariff threats have particularly heightened these fears – with some analysts suggesting that some consumers may have already driven up prices as they brought forward their purchases in anticipation of the trade tariffs.

“Recent economic strength, coupled with the increasing threat of tariffs, has increased inflation risk,” Principal Asset Management’s Shah said in a separate note ahead of Wednesday’s release.

Not all sectors of the economy are showing strength. The white-collar industries reflected in the business and services components of the labor surveys have added almost no net new jobs over the past 18 months. Manufacturing wage growth has also stalled.

And not all economists are expressing much concern about renewed price hikes as a result of Trump’s planned actions – or that those plans would lead to unexpected interest rate hikes from the Fed.

“We do not expect changes in fiscal or immigration policy to significantly boost inflation, and we have a hard time imagining tariffs that boost inflation enough to provide a plausible argument for interest rate hikes that do not Unsettling the stock market, as was the case even with much lower tariffs.” “2019,” Jan Hatzius, chief economist at Goldman Sachs, wrote in a recent note.

However, the general mood remains cautious as hopes for further “disinflation” – or a slower rate of price increases that Trump wants most – remain in limbo.

“From now on, disinflation will occur much more slowly,” Bank of America analysts said in a note to clients this week.