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US inflation rose slightly to 2.5 per cent in February, according to the metric that the Federal Reserve uses for its target.

The rise in headline Personal Consumption Expenditures inflation, from 2.4 per cent in the year to January, was in line with market expectations. The Fed has a target of 2 per cent inflation.

The month-on-month figure rose 0.3 per cent, from a revised 0.4 per cent in January, the Bureau of Economic Analysis said.

The annual core measure, which strips out changes in energy and food prices, was 2.8 per cent, slightly lower than a revised figure of 2.9 per cent for January.

Markets had expected the core reading to remain flat. The core month-on-month measure was 0.3 per cent, from a revised 0.5 per cent in January.

This is a developing story

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