The personal consumption expenditures price index - out Friday from the Commerce Department - rose 0.3% last month, slightly lower than what economists polled by Reuters had predicted.
The U.S. Federal Reserve has hiked interest rates to bring down inflation. While the inflation rate has dropped significantly from a peak of more than 9% in June of 2022, it's still hovering above the Fed's annual target rate of 2%.
The PCE - which is the Fed's preferred inflation gauge - put the annual rate at 2.5%... in line with economists' expectations.
Fed Chair Jerome Powell, interviewed at the San Francisco Fed on Friday, said the data was "more along the lines of what we want to see," adding, "it's good to see something coming in line with expectations."
Core inflation - which strips out volatile food and energy prices - increased 2.8% year-over-year in February, the smallest gain since March of 2021.
With inflation slowing, consumers boosted their spending. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, jumped 0.8% last month. That was the largest gain since January of 2023.
Fed policymakers anticipate three interest rate cuts this year. Financial markets expect the first rate cut to come in June.
Most U.S. markets were closed Friday for the Good Friday holiday.
