An inflation gauge closely tracked by the Federal Reserve jumped 6.6% in March compared with a year ago, the highest 12-month reading of the personal consumption index (PCE) in four decades, further evidence that surging prices are pressuring household budgets and the health of the economy.

Yet there were signs in Friday's report from the Commerce Department that inflation might be slowing from its galloping pace and perhaps nearing a peak, at least for now.

Excluding the especially volatile food and energy categories from the PCE, core prices rose 5.2% in March from a year earlier. That was slightly below the 5.3% year-over-year increase in February, and it was the first time that 12-month figure has declined since February 2021, before the inflation spike began. And on a month-to-month basis, core prices rose 0.3% from February to March, the same as from January to February.

The report also showed that consumer spending rose at a solid pace last month, though the gain largely reflected higher prices at the gas pump, grocery store and other places where Americans shop for necessities. But even adjusted for inflation, spending rose 0.2%.

Still, inflation is eroding Americans' purchasing power and leading the Federal Reserve to plan a series of sharp interest rates hikes in the coming months.

At the same time, paychecks are expanding at a healthy pace, helping consumers keep up with some of the inflation spike. Employers are raising wages because many of them are desperate to find and keep workers. Job openings are near a record high, and the unemployment rate, at 3.6%, is just above the half-century low it reached just before the pandemic.