Key gauge just above Fed’s target for inflation

WASHINGTON — A measure of inflation that is closely tracked by the Federal Reserve slipped last month in a sign that price pressures continue to ease.

The government reported Friday that prices rose 0.3% from January to February, decelerating from a 0.4% increase the previous month in a potentially encouraging trend for President Joe Biden’s reelection bid. Compared with 12 months earlier, though, prices rose 2.5% in February, up slightly from a 2.4% year-over-year gain in January. The Fed’s annual target is 2%.

Excluding volatile food and energy costs, last month’s “core” prices suggested lower inflation pressures. These prices rose 0.3% from January to February, down from 0.5% the previous month. And core prices rose just 2.8% from 12 months earlier — the lowest such figure in nearly three years — down from 2.9% in January. Economists consider core prices to be a better gauge of the likely path of future inflation.

Friday’s report showed that a sizable jump in energy prices — up 2.3% — boosted the overall prices of goods by 0.5% in February. By contrast, inflation in services — a vast range of items ranging from hotel rooms and restaurant meals to health care and concert tickets — slowed to a 0.3% increase, from a 0.6% rise in January.

The figures also revealed that consumer purchases, which drive most of the nation’s economic growth, surged 0.8% last month, up from a 0.2% gain in January. Some of that increase, though, reflected higher gasoline prices.

Annual inflation, as measured by the Fed’s preferred gauge, tumbled in 2023 after having peaked at 7.1% in mid-2022 as supply chain bottlenecks eased.