New Delhi, Feb. 20 -- The Federal Reserve's preferred inflation gauge is expected to show prices rose faster in December, reinforcing policymakers' increasing caution on cutting interest rates.

The consensus call among economists surveyed by FactSet is that core personal consumption expenditures, which don't include volatile food or energy prices, rose 0.37% in December from the prior month and 3.0% from a year earlier, up from 2.8% in November. Headline PCE is forecast to increase 0.3% on the month and 2.7% year over year.

A monthly gain of 0.37%, translating to an annualized pace well above the Fed's 2% target, would suggest that progress on reducing inflation has slowed after steadying in recent months, following a series of increase...