The central bank’s preferred inflation measure, released on Friday, climbed 2.5 percent in January from a year earlier, slightly lower than the previous reading of 2.6 percent but still well above the Fed’s 2 percent target. On a monthly basis, prices increased 0.3 percent, in line with December’s pace.

U.S. consumer spending unexpectedly fell in January, but a pick up in inflation could provide cover for the Federal Reserve to delay cutting interest rates for some time. Consumer spending, which accounts for more than two-thirds of U.

The personal consumption expenditures (PCE) index, the Federal Reserve’s preferred gauge of inflation, fell marginally in January, easing concerns that the Trump administration’s tariff policy might upend the central bank’s efforts to control price rises.

The Federal Reserve's preferred inflation measure cooled slightly in January, according to government data published Friday, although it remained stuck above the bank's long-term target. While inflation has remained stuck above the bank's long-term two percent target,