Consumer spending up, inflation accelerates
U.S. consumer spending rose for an eighth straight month in February as households tapped savings to cover higher food and energy prices, Reuters said after the release of a U.S. Commerce Department report.
Spending rose 0.7 percent in February after a 0.3 percent increase in January, and inflation accelerated at its fastest pace since June 2009, according to the report.
Economists polled by Reuters had expected consumer spending, which accounts for about 70 percent of U.S. economic activity, to advance 0.6 percent.
“The data provide yet more evidence that higher prices are denting economic growth,” said Paul Dales, senior U.S. economist at Capital Economics.
After increasing at its fastest clip in four years in the final three months of 2010, consumer spending is expected to slow in the first quarter, with rising energy and food prices resulting in decreased spending on other goods and services.
High food and energy prices pushed up overall inflation last month. The Commerce Department said the personal consumption expenditures (PCE) price index rose 0.4 percent, the fastest since June 2009, after gaining 0.3 percent in January.
A core measure of inflation closely watched by the Federal Reserve, the core PCE index, excluding food and energy, increased 0.2 percent after rising by the same margin in January.