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(Bloomberg) -- Federal Reserve Bank of Richmond President Tom Barkin said fresh data show continued progress on lowering inflation toward the central bank’s 2% goal, but that interest rates should remain restrictive.Most Read from BloombergThese Homes Withstood the LA Fires. Architects Explain WhyAs E-Bikes Boom in NYC, Some Call for More RegulationsChicago Agency Pitches $1.5 Billion Plan to Fix Transit WoesNYPD Reforms Car Chase Policy Amid Rising Crashes, InjuriesChurches, Cinemas — and Moon

U.S. inflation accelerated last month as prices for gas, eggs, and used cars rose, yet underlying price pressures also showed signs of easing, bolstering hopes that the Federal Reserve could still cut its key interest rate this year. The consumer price index rose 2.9% in December from a year ago, Wednesday’s report from the Labor Department showed, up from 2.7% in November.

At 09:41 a.m. ET the Dow Jones Industrial Average rose 613.51 points, or 1.44%, to 43,131.79, the S&P 500 gained 85.16 points, or 1.46%, to 5,928.07, and the Nasdaq Composite rose 335.07 points, or 1.76%, to 19,379.64. The domestically focused small-cap Russell 2000 index jumped 2.3%. A Labor Department report showed the consumer price index rose in line with expectations in December.

U.S. stocks are rallying Wednesday after Wall Street and financial markets worldwide got a shot of adrenaline from an encouraging update on U.S. inflation. Treasury yields also eased sharply in the bond market following the update on how much more U.S. households had to pay in December for eggs, gasoline, housing and other costs of living. After ignoring prices for food and energy, which can zigzag sharply from month to month, underlying inflation trends slowed to 3.2% in December.

Oil prices rose on Wednesday as the market focused on potential supply disruptions from U.S. sanctions on Russian energy companies and tankers carrying Russian oil. Brent crude futures were up 65 cents, or 0.8%, at $80.57 a barrel by 1420 GMT. The latest round of U.S. sanctions on Russian oil could disrupt Russian oil supply and distribution significantly, the International Energy Agency said in its monthly oil market report on Wednesday, adding that "the full impact on the oil market and on access to Russian supply is uncertain."

A key inflation metric eased for the first time since July as investors debate the Federal Reserve's next interest rate decision.

Government data showed consumer prices rose 2.9% in the 12 months through December, in line with economists' expectations. Before the report, interest-rate futures were pricing a single quarter-point interest-rate cut this year, no sooner than June.