The Federal Reserve raised interest rates for the first time in three years in mid-September. But the Fed paused in late October. In its policy statement, the central bank acknowledged that " inflation remains elevated," but said "more information" will help it determine the right policy to get inflation back to its 2% goal and "deliver price stability."

The decision followed the release of the September Consumer Price Index (CPI) report, with higher gas and fuel prices the main catalyst behind CPI's 3.7% year-over-year rise.

And with energy costs likely to stay elevated as the situation in the Middle East remains unresolved, David Payne , staff economist and reporter for The Kiplinger Letter, believes the annual CPI rate will end the year at 4%, while core CPI, which excludes volatile food and energy prices, will be at 2.7%.

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