Economists widely expect an inflation report on Thursday to confirm that January was something of a setback in the battle against rapid cost-of-living increases.

Inflation, as measured by Personal Consumption Expenditures by the Bureau of Economic Analysis, likely rose 0.3% in January from December, an acceleration from the 0.2% increase in December, according to a survey of economists by Dow Jones Newswires and the Wall Street Journal. Core inflation, which excludes prices for food and energy, is expected to have risen 0.4%, double the 0.2% increase of December.

If those predictions hold, the report would likely confirm the signal from a different measure of inflation—the Consumer Price Index—which earlier this month showed that inflation is proving more stubborn than policymakers at the Federal Reserve had hoped. 

“Unfortunately, we expect a similar performance of these measures as in the January CPI report,” Scott Anderson, chief U.S. economist at BMO Capital Markets, wrote in a commentary.

The PCE measure of inflation is especially significant because officials at the Fed prefer its reading on the trajectory of inflation over the widely reported CPI. The two measures usually move in the same direction, but lately, a gap has opened between the two, with PCE showing somewhat tamer inflation.

The Fed has held its benchmark interest rate at its highest level since 2001 to subdue the high inflation that flared up after the pandemic. While inflation has fallen significantly since its summer peak, Fed officials have said they’re waiting for more data showing inflation is firmly on its way back down to their goal of annualized 2% before they will begin to reduce the fed funds rate.

The high fed funds rate has pushed up interest rates on mortgages, car loans, and all kinds of other credit, and another disappointing inflation report could delay rate cuts and keep those borrowing costs higher for longer.

Financial markets are now betting that the first rate cut will come in June, bets that have been pushed back from expectations for a rate cut as early as March, according to the CME Group’s FedWatch tool, which forecasts rate cuts based on fed funds futures trading data.

"We already know that January's inflation data has come in hot and that has led markets to noticeably reassess their expectations for the timing of the first rate cut," wrote Ryan Sweet, chief U.S. economist for Oxford Economics in an commentary about Wednesday's gross domestic product revision. "The Federal Reserve has stressed that the economy does not need to weaken to cut interest rates, rather it is contingent on its confidence that inflation is still moving toward its 2% target."

Still, even if there is a setback, most economists think figures are bound to fall further in the coming months as rent inflation has fallen over the last year but hasn’t yet been reflected in official data.