The central bank’s preferred inflation measure, released on Friday, climbed 2.5 percent in January from a year earlier, slightly lower than the previous reading of 2.6 percent but still well above the Fed’s 2 percent target. On a monthly basis, prices increased 0.3 percent, in line with December’s pace.

The Federal Reserve’s preferred inflation gauge cooled as expected in January; however, the good news came with a red flag for the US economic engine: Consumers pulled back their spending by the most in nearly four years.

The Federal Reserve’s preferred measure of underlying inflation rose at a mild pace in January, offering some relief after a string of reports suggested price pressures are heating up again, while consumers pulled back on spending.