The personal consumption expenditures price index (PCE), one of the Federal Reserve’s favorite core inflation measures, was at an annual rate of 2.5% in January, in line with Wall Street’s expectations, according to news reports.

The PCE rose 0.3% for the month of January. Excluding the volatile food and energy costs, core PCE still rose 0.3% for the month, but was up 2.6% for the past 12 months. Fed officials reportedly think of the PCE as an accurate gauge of inflationary trends because it is broader based than other measures, tracks consumer trends more accurately and places less emphasis on housing costs.

The results reported by the Commerce Department on Friday showed that inflation cooled slightly in January. Earlier in the month, the consumer price index (CPI), another major inflation measure, showed an annual increase of 3.0% and a core increase, excluding food and energy, of 3.3%, well above the Fed’s target inflation level of 2.0%. CPI’s higher measure had worried analysts that inflation was heating up and would delay future rate cuts from the Fed.

Personal income was up 0.9% for the month, much higher than the predicted 0.4% increase. But it turned out many consumers opted to save their new income rather than spend it. The biggest surprise in the report was that consumer spending actually went down 0.2%, compared to forecasts which called for spending to rise 0.1%. The personal savings rate jumped 4.6% during the month.

Goods prices rose 0.5% for the month, mainly because of a 2.0% rise in the cost of gas and a 0.9% increase in the cost of cars, trucks and repair parts. Services rose 0.2% and housing costs were up 0.3%.

After the announcement, futures traders slightly increased the odds of the Fed cutting interest rates in June by a quarter percentage point, according to news reports.