The Fed’s preferred inflation gauge overall rose 2.5% in February, meeting expectations. Core inflation rose 0.4% month over month, more than expected.

The Federal Reserve’s preferred inflation metric rose at a stubborn pace in February and household demand was weaker than expected, illustrating a more guarded consumer amid growing concerns about finances.

The Personal Consumption Expenditures (PCE) price index increased 0.3% in February after advancing by an unrevised 0.3% in January, the U.S. Commerce Department said on Friday. Economists had forecast the PCE price index gaining 0.

An inflation gauge closely watched by the Federal Reserve remained high last month even before the impact of most tariffs has been felt.

Inflation is headed in the wrong direction and Americans have grown more cautious about how much they spend — not a good omen for the U.S. economy.

U.S. consumer spending rebounded in February amid rising prices for goods and services, which could amplify fears that the economy was facing a period of tepid growth and high inflation amid an escalation in trade tensions.