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 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 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.

In a statement, President Joe Biden praised Friday's report as progress in the fight against inflation, a key priority of his administration, touting legislative efforts like his Inflation Reduction Act to lower costs for American families.

"The fight against inflation isn’t over, and every day my Administration is working to give families more breathing room," Biden said. "After decades of talk in Washington, we are taking historic action to lower prescription drug costs for seniors, capping insulin at $35 and allowing Medicare to negotiate lower prices. In February we saw the lowest food inflation in nearly two years."

The president went on to highlight inflation aimed at boosting jobs, like his Bipartisan Infrastructure Law and his semiconductor manufacturing bill, the CHIPS and Science Act, as part of his efforts to "build America up by investing in strong supply chains and good jobs here in America" while also looking to lower costs.

"My Investing in America agenda is creating good-paying jobs for the long term – good jobs in every community whether or not you have a 4-year college degree," Biden said. "These are jobs that we can be proud of as we rebuild the country with modern infrastructure, supply chains, and manufacturing here at home."

He also warned of looming crisis should Republicans in Congress enact their plans to repeal his legislative efforts.

"We should continue to invest in America from the middle out and the bottom up," Biden concluded. "This is not the time to turn back to trickle-down economics by cutting American manufacturing and other critical programs American families count on, just to pay for tax cuts for the wealthy, Big Pharma, and Big Oil. The last thing our economy needs right now is the reckless threat of a chaotic default. Those threats must be taken off the table."

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.

The Fed’s policymaking has been complicated by the tumult that erupted in the financial system after the collapse this month of Silicon Valley Bank and New York-based Signature — the second- and third-biggest bank failures in U.S. history. The central bank now must consider the risk that its continuing efforts to cool inflation through ever-higher interest rates could further destabilize the banking system.

At a news conference last week, Fed Chair Jerome Powell acknowledged that the uncertainties now overhanging small and midsize banks will likely cause tighter lending conditions. If banks do restrict lending in the coming months, Powell noted, it would probably slow the economy and perhaps act as the equivalent of a quarter-point Fed rate hike.

The Fed is thought to monitor the inflation gauge that was issued Friday, called the personal consumption expenditures (PCE) price index, even more closely than it does the government’s better-known consumer price index. Typically, the PCE index shows a lower inflation level than CPI. In part, that’s because rents, which have been among the biggest drivers of inflation, carry twice the weight in the CPI that they do in the PCE.

The PCE price index also seeks to account for changes in how people shop when inflation jumps. As a result, it can capture emerging trends — when, for example, consumers shift away from pricey national brands in favor of less expensive store brands.