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.

Inflation in the Federal Reserve’s preferred price gauge eased in January after making steady increases throughout the fall. The personal consumption expenditures (PCE) price index increased by

The year-over-year gain in the Fed’s preferred measure of inflation was in line with economists’ expectations and slowed from December’s 2.6% annual jump. The monthly readin

Yet data released Friday by the Commerce Department also showed that Americans cut their spending last month 0.2% in January from the previous month, likely in part because of unseasonably cold weather. Still, the drop may raise alarms about whether Americans are growing more cautious amid widespread uncertainty about the economic outlook.

Photo: U.S. consumers cut back sharply on spending last month, the most since February 2021, even as inflation declined, though stiff tariffs threatened by the White House could disrupt that progress.

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.