The core personal consumption expenditures (PCE) price index climbed 0.4 percent for the month, marking the largest gain since January 2024 and bringing the annual inflation rate to 2.8 percent.

NEW YORK, March 28 (Xinhua) -- The Federal Reserve's preferred inflation gauge rose more than anticipated in February, while consumer spending increased less than expected, the Commerce Department reported Friday.

The core personal consumption expenditures (PCE) price index climbed 0.4 percent for the month, marking the largest gain since January 2024 and bringing the annual inflation rate to 2.8 percent. Economists surveyed by Dow Jones had projected increases of 0.3 percent and 2.7 percent, respectively.

Core inflation, which excludes volatile food and energy costs, is viewed as a better measure of long-term price trends.

Including all items, the PCE price index rose 0.3 percent in February and 2.5 percent over the past year, both matching forecasts.

Meanwhile, the Bureau of Economic Analysis reported that consumer spending grew 0.4 percent for the month, slightly below the expected 0.5 percent increase, while personal income rose 0.8 percent, doubling the 0.4 percent estimate.

Prices for goods rose 0.2 percent in February, driven by a 0.5 percent increase in prices for recreational goods and vehicles, while a 0.8 percent drop in gasoline prices helped offset some of the gains. Service prices climbed 0.4 percent.

Households became more cautious with their finances, as the personal savings rate rose to 4.6 percent, the highest level since June 2024.

The report comes with growing market concerns that U.S. President Donald Trump's tariff policies could exacerbate inflation just as price growth had been making slow but steady progress toward the Federal Reserve's 2 percent target.

While Fed Chair Jerome Powell has reassured markets that inflationary pressures are likely "transitory," his comments are losing traction as the trade conflicts escalate. Some Fed officials have acknowledged heightened uncertainty, with one describing the economic outlook as having "zero visibility" in a "dense fog."

The report also indicated signs of weakening consumer strength, as spending rose less than expected despite rebounding from January's unexpected decline. U.S. stocks edged lower following the report.