Inflation has been an economic scourge for many Americans under President Joe Biden and will likely remain an ongoing problem under Donald Trump.

Consumer prices rose 2.9% in December from a year earlier, according to government data released on Wednesday. That's well below the U.S.'s four-decade high of 9.1% in mid-2022. But here's the worry: This marks the third month in a row that annual inflation has been slowly rising, rather than falling.

That shows both how far the Fed has come in curbing inflation and that policymakers are working to get inflation down to the Fed's preferred 2% target.

Now, economists worry that inflation could get worse under Trump. Here are three things you need to know about inflation.

Inflation is hitting home

Americans have been fed up with inflation for some time now—and for good reason. Some of the items with the highest price increases are items that are vital to most households.

Gas and food prices were among the biggest drivers of inflation in December. Driven by bird flu, egg prices rose nearly 37% compared with the same period last year.

Car insurance costs are up 11% from last year. At the same time, natural gas prices are also rising, rising 4.4% in December compared with November.

Sarah House, senior economist at Wells Fargo Corporate and Investment Banking, called rising prices "an ongoing challenge for many households." She pointed out that although wages have generally risen, this trend has not substantially reduced the financial burden on families.

"If you look at wage growth over the past year, it's still outpacing the overall increase in inflation, but not by a lot, especially when we look again at some of the items that many households are buying more frequently," she said .

But there is some less negative news. Rental prices, for example, are stabilizing—although that just means they're not rising as fast as they once were. Housing prices covering rent rose 4.6% year-on-year, a slower pace than in recent months.

Excluding the most volatile food and energy prices, prices rose 3.2% year-on-year in December. It was the smallest gain in months for the measure, known as core inflation.

Investors are taking a very positive view of the slowdown in the core consumer price index: On Wednesday, the Dow Jones Industrial Average soared more than 700 points by midday trading.

Fed still working to lower inflation

Still, inflation remains higher than the Fed wants. That could mean the Fed needs to keep interest rates higher for longer despite significant progress in bringing inflation back from its 2022 peak.

After cutting rates by a full percentage point last year, the Fed last month projected just two quarter-percentage rate cuts in 2025, and some economists expect fewer cuts in the future.

Still, the Fed believes it still has room for maneuver. Data last week showed that the labor market is still growing strongly, with 256,000 new jobs added last month.

This means the Fed does not need to rush to cut interest rates. Instead, it could keep interest rates higher and hope that a healthier economy and rising wages help offset the pain from inflation.

Why Trump is making inflation worse

Another major reason some Fed policymakers are hesitant to cut interest rates is Donald Trump.

Anger over inflation was a big reason many Americans voted for Trump last year, but some of Trump's economic policies could make inflation worse.

A major concern is his threat to impose tariffs on imports from other countries, which economists warn will ultimately be paid directly by U.S. consumers.

The countries Trump named include the country's three largest trading partners: Mexico, Canada and China. Tariffs on these three products alone could raise prices on a range of goods, from cars to oil to electronics.

Omair Sharif, founder and president of Inflation Insights, said the tariffs Trump imposed during his first term were more targeted and not "on weekend Home Depot purchases."

This time, however, Trump is threatening widespread tariffs. Sharif said if he follows through, many families will feel the impact: "You'll probably pay a higher price."

At the same time, Trump has also threatened to mass deport immigrants, although who he will target and how he will do this is uncertain. Economists say it could also push up prices by raising labor costs.

It's hard to say exactly what Trump will do during his term. However, the country will soon start getting clues on this after he takes office on Monday.