A key measure of inflation worsened in February, according to the Commerce Department.

The Personal Consumption Expenditures index, or PCE index, measures the prices of goods and services purchased by U.S. consumers. In February of this year, the PCE index increased 2.5% from February of last year, according to a Bureau of Labor Statistics report Friday.

The Fed’s target rate for inflation is around 2%, central bank officials have said. The PCE index in February was up only a thin fraction of a percentage point from the previous month. Minus food and energy expenditures, February’s PCE index increased 2.8% over the last year.

What does this mean for government monetary policy? Federal Reserve Chairman Jerome Powell said on Friday he was not surprised by the PCE data. “It’s good to see something coming in line with expectations,” he added. The Federal Reserve has said that it wouldn’t be ready to cut back its interest rates until it saw consistent evidence that inflation was sustainably reducing.

This story originally appeared in WORLD. © 2024, reprinted with permission. All rights reserved.