Inflation slowed to 1.7 percent on the year in April, the Bureau of Economic Analysis reported Tuesday, in line with investor expectations.

After rising for nearly two years, inflation has cooled off, as measured by the personal consumption expenditures index released Tuesday.

Although it is different from the more-widely cited consumer price index, the index released Tuesday is favored by the Federal Reserve for pursuing its 2 percent target. Inflation briefly hit 2 percent in February for the first time in nearly five years before the most recent slide.

Core inflation, which strips out food and energy prices to provide a less volatile measure of price movements, was just 1.5 percent, lower than investors expected. Core inflation has fallen for three straight months, down from 1.8 percent earlier this year.

While lower inflation is better for families because it means that their money has greater purchasing power, the Fed has been trying to generate stronger inflation. Officials at the central bank don't want higher inflation for its own sake, but rather as assurance that the economy is operating at full capacity.

At their most recent meeting, in May, Fed officials were divided over the slowdown in inflation, the minutes from the meeting showed. Most thought that it was merely a temporary phenomenon, and that price gains will pick up in the months ahead as unemployment continues to fall and spending rises. Some officials, though, worried that the Fed was falling short of hitting its 2 percent target.

Sussing out the underlying trends in the inflation data can be tricky. Although consumer prices have also slowed their gains this spring, much of that is attributable to one factor, namely the competition between cell carriers to offer unlimited data plans. That bidding war has translated into lower measured cell service prices, accounting for a large part of the inflation slowdown.

In fact, markets appeared to shrug off the possibility that Fed officials could be deterred by low inflation from raising their target for interest rates in the months ahead. Bond market prices Tuesday morning indicated that investors put a 90 percent probability on the Fed raising short-term interest rates at the next monetary policy meeting in June.