The Federal Reserve's preferred gauge of underlying inflation cooled last month after an even bigger January increase that initially reported.

The so-called core personal consumption expenditures price index, which strips out the volatile food and energy components, increased 0.3% from the prior month, data out Friday showed. That followed a 0.5% reading in January, marking the biggest back-to-back gain in a year. From a year ago, it advanced 2.8%.

Economists consider the core to be a better gauge of underlying inflation than the overall index. That metric rose 0.3% from the prior month and 2.5% from a year ago, boosted by higher gasoline prices.

Inflation-adjusted consumer spending advanced 0.4%, above all estimates after a larger drop in the prior month. according to the report from the Bureau of Economic Analysis. Real disposable income, the main supporter of spending, edged lower for the first time since September.

The core PCE data, on a six-month annualized basis, accelerated to 2.9%, the fastest since July. And the end of last year, it briefly slipped below the Fed's 2% target.

The figures corroborate other measures of inflation that showed price pressures intensified at the start of the year. While Fed officials attribute this to the bumpy nature of getting back to their goal, they've also pointed the figures as reason to not rush into cutting interest rates.

Chair Jerome Powell, who is speaking later Friday, has stressed the need for patience, saying the timing of the first rate cut would be "highly consequential." Policymakers will have access to one more PCE report, as well as others on consumer and producer prices as well as employment, before their next meeting starts on April 30.

Source : Bloomberg