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.

A strong increase in spending on goods suggests Americans were making purchases ahead of proposed tariffs from President Donald Trump.

The Federal Reserve's go-to gauge showed inflation stayed hot in February, the Commerce Department said on Friday. Why it matters: It is a warning to officials at the White House and the Fed, with aggressive tariffs expected to be unveiled next week that could stoke inflation and squeeze economic demand.

The Federal Reserve’s preferred inflation measure showed underlying price pressures persisting in February, as inflation-adjusted spending stayed muted.

Data released Friday by the Bureau of Economic Analysis shows that the Personal Consumption Expenditures Price Index (PCE) increased 2.8% compared to one year ago, excluding food and energy.

Tariff-related inflation, which Fed Chairman Powell has said could be transitory, is finding its way into the slowing U.S. economy.