New inflation data out Wednesday showed consumer prices rose as forecast in October, keeping the Federal Reserve on track to lower interest rates again in December.

The latest data from the Bureau of Labor Statistics showed that the Consumer Price Index (CPI) increased 2.6% over the prior year in October, a slight uptick from September's 2.4% annual gain in prices. The yearly increase matched economist expectations.

The index rose 0.2% over the previous month, matching the increase seen in September and also on par with economists' estimates.

On a "core" basis, which strips out the more volatile costs of food and gas, prices in October climbed 0.3% over the prior month, matching September, and 3.3% over last year for the third consecutive month.

"There is progress on inflation," Claudia Sahm, chief economist at New Century Advisors, told Yahoo Finance following the data's release. "We are pointed in the right direction, but it has been a slow grind. And this is another month that fits in that slow grind."

Although inflation has been slowing, it has remained above the Federal Reserve's 2% target on an annual basis. Over the past three and six months, the picture has become even more muddled for the central bank.

For the month of October, the three-month annualized rate for core CPI rose to 3.6% versus the prior 3.1%. The six-month annualized rate held steady at 3.3%.

The Fed's path forward

The outlook for inflation remains uncertain as economists warn of another potential inflation resurgence following the election of Donald Trump as the nation's next president.

Trump and his proposed policies have been viewed as potentially more inflationary due to the president-elect's campaign promises of high tariffs on imported goods, tax cuts for corporations, and curbs on immigration.

In a press conference last week, Federal Reserve Chair Jerome Powell said the central bank does not and will not make decisions based on expected policy changes from a new administration.

"In the near term, the election will have no effect on our policy decisions," he said. "We don't know what the timing and substance of any policy changes will be. We, therefore, don't know what the effects on the economy would be, specifically whether and to what extent those policies would matter for the achievement of our goal variables: maximum employment and price stability."

Immediately following Wednesday's release, markets continued to price in another 25 basis point rate cut in December after the central bank cut rates by that amount last week. Traders currently see a more than 80% chance that the Fed cuts rates by 0.25% next month, up from just under 60% on Tuesday, according to data from CME's FedWatch Tool.