Minneapolis
CNN
 — 

The Federal Reserve’s preferred inflation gauge cooled back down in February after ticking up unexpectedly the month before, a welcome sign in the central bank’s long battle to bring down historic price increases.

The Personal Consumption Expenditures price index rose 5% for the 12 months ended in February, lower than January’s downwardly revised 5.3% gain, the Commerce Department reported Friday.

On a monthly basis, prices were up 0.3%, a cooling from January’s 0.6% surge.

Economists were expecting a monthly gain of 0.2%, according to Refinitiv.

The core PCE index, which excludes the more volatile food and energy categories, showed prices increased 0.3% on a month-on-month basis and rose 4.6% on an annual basis. In January, the core PCE index was up 4.7% year-over-year.

Consensus estimates from economists forecast the core PCE index would rise 0.4% from the prior month and 4.7% year over year.

PCE, specifically the core measurement, is the Fed’s favored inflation gauge since it provides a more complete picture of costs for consumers.

Consumer spending rose 0.2% in February, representing a sharp cooldown from January’s hot reading of 1.8%, according to the report.

Personal incomes grew 0.3% last month and the personal savings rate, which is personal savings as a percentage of disposable personal income, gained 0.2 percentage points to 4.6%.

This story is developing and will be updated.