The Federal Reserve's favored inflation gauge slowed sharply last month, an encouraging sign in the Fed's yearlong effort to cool price pressures through steadily higher interest rates.

Friday’s personal consumption expenditures (PCE) report from the Commerce Department showed that consumer prices rose 0.3% from January to February, down from a 0.6% increase from December to January. Measured year-over-year, prices rose 5%, slower than the 5.3% annual increase in January.

The report also showed that consumer spending rose 0.2% from January to February, a drop from a month earlier but an indication that households are still providing fuel for economic growth.

Taken as a whole, Friday's PCE figures show that inflation pressures, though easing gradually, still maintain a grip on the economy. The Fed has raised its benchmark rate nine times since March of last year in a strenuous drive to tame inflation, which hit a four-decade high in mid-2022.

Even after having slowed, consumer prices are still posting year-over-year increases well above the Fed's 2% target. Earlier this month, the Labor Department said its consumer price index rose 0.4% from January to February and 6% from February 2022.