Closely watched inflation gauge fell in February, in line with expectations

WASHINGTON (TND) — The Federal Reserve's preferred measure of inflation showed prices moderated in February after a hotter-than-expected reading the prior month.

The Commerce Department's Personal Consumption Expenditures price index fell to 5%year over year from January's revised reading of 5.3%. Core PCE, which excludes volatile food and energy prices, fell more modestly from 4.7% to 4.6%. The Fed's target inflation rate is 2%.

Personal incomes rose 0.3% for the month and the personal savings rate rose from 4.4% to 4.6%.

Following the release of the report, President and CEO of the Federal Reserve Bank of Boston Susan Collins told Bloomberg she and her colleagues "have more work to do and more to see" before they can be sure inflation is on a steady downward trajectory.

“One month of move in a kind of more helpful direction is not something that really indicates a sustained change," Collins said.

A Quinnipiac Universitypoll out this week showed the top personal financial concern among adults is food costs, followed by retirement savings, healthcare costs and mortgage or rent.

In a statement reacting to Friday's report, President Joe Biden said progress has been made in the fight against inflation, citing his administration's work to cap insulin costs at $35 and allowing Medicare to negotiate drug prices.

"Today’s report shows annual inflation down by nearly 30% from this summer against a backdrop of low unemployment and steady growth. The fight against inflation isn’t over, and every day my Administration is working to give families more breathing room," Biden said in a statement.

Harvard Kennedy School Professor Jason Furman, who chaired the White House Council of Economic Advisers under former President Barack Obama took a more pessimistic view, telling CNBC there's been nothing new and particularly reassuring about the macroeconomy in the past three and a half weeks.

"We know that inflation is running at about a 4.5% pace. We know that the economy is probably growing faster than its potential," he said. "We know that that's just a really, really big task to get from here to where we need to go on inflation."