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Inflation rose faster than expected in February, according to the PCE report released Friday. Meanwhile, spending rose less than expected, highlighting the risks that President Donald Trump's campaign of tariffs could push the economy into "stagflation."

Economists had forecast the PCE price index gaining 0.3%. Stripping out the volatile food and energy components, the price index rose 0.4% after an unrevised 0.3% advance in January. In the 12 months through December, core inflation increased 2.8% after rising 2.7% in January.

Friday's PCE data release comes as investors closely watch where inflation stands at the onset of President Trump's tariff policies.

Inflation picked up last month and consumers barely raised their spending, signs that the economy was already cooling even before most tariffs were imposed. Excluding the volatile food and energy categories, core prices rose 2.8% compared with a year ago, higher than January’s figure of 2.7%. Economists watch core prices because they are typically a better guide of where inflation is headed.

WASHINGTON (Reuters) -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. The report from the Commerce Department on Friday showed a measure of underlying price pressures increasing by the most in 13 months. Economists say President Donald Trump's protectionist trade agenda, marked by a rush of tariff action announcements since taking office in January, will boost prices of imported goods and drive inflation higher in the months ahead.

Americans increased their spending last month after taking a breather in January, while inflation was a mixed bag, new Commerce Department data showed Friday.

Federal banking regulators pointed to pending litigation as the reason for pulling back the 2023 rule.