Stronger consumer spending led an upward revision to fourth-quarter economic growth in data released Thursday.
The Federal Reserve's preferred measure of inflation hit its 2% target for the first time in nearly five years, according to Department of Commerce data.
The personal consumption expenditures deflator — a measure of prices — increased by 2.1% year-on-year in February, in line with economists' expectations. It rose 0.1% month-on-month.
In March, the Fed raised interest rates and signaled two more increases this year based on confidence that the economy was doing well and inflation was advancing toward its target.
The data released Friday also showed that consumer spending cooled in February, suggesting that it may not provide as big a boost in the first quarter as it did in the fourth. Real personal spending fell by 0.1% as income rose 0.4%.