WASHINGTON – Consumer spending inched up in June, a sign of modest momentum in a key segment of the U.S. economy.
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Personal consumption expenditures, a measure of household spending on everything from washing machines to haircuts, increased a seasonally adjusted 0.1% in June from the prior month, the Commerce Department said Tuesday. Economists surveyed by The Wall Street Journal had expected a 0.1% rise. Adjusted for inflation, consumer spending was unchanged in June.
Personal income, a measure that includes wages and government assistance, was flat from May. Economists had forecast a 0.4% increase.
The personal-saving rate was 3.8% in June, down from 3.9% the prior month and 5.1% a year earlier.
Tuesday's report also showed the Federal Reserve's preferred measure of inflation, the price index for personal consumption expenditures, was flat in June from the prior month. Excluding the often-volatile categories of food and energy, so-called core prices were up 0.1% in June.
Headline inflation slipped in June on an annual basis. Overall prices rose 1.4% from a year earlier, down from 1.5% annual growth in May. Core prices were up 1.5% in June, steady from the prior month.
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The Fed targets a 2% annual inflation rate. The price index hit and slightly exceeded that level in early 2017 for the first time in nearly five years, but has since settled lower.
Despite recent soft inflation readings, Fed Chairwoman Janet Yellen said at her congressional testimony in July that it was "premature to conclude that the underlying inflation trend is falling well short of" the Fed's target.
"We have quite a tight labor market and it continues to strengthen, and experience suggests that ultimately, although with a lag, we're not seeing very substantial upward pressure on wages," Ms. Yellen said. "But we may begin to see pressures on wages and prices as slack in the economy diminishes."
Some Fed officials, though, have expressed concern in recent weeks about pushing ahead with interest-rate increases in light of the softening inflation data. Federal Reserve Bank of Philadelphia President Patrick Harker said last month the recent slowing path of inflation gave him pause over whether the central bank should raise its benchmark interest rate for a third time this year.
Overall, though, the economy appears to be advancing at a steady pace.
Consumer spending propelled economic growth in the second quarter, the Commerce Department reported last week. Gross domestic product, a broad measure of economic output, rose at a seasonally and inflation adjusted annual rate of 2.6%, aided by a 2.8% growth rate for consumer spending. That was up from the first quarter's 1.9% growth pace for household outlays.
The Commerce Department's report on personal income and spending can be accessed at: https://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm
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(END) Dow Jones Newswires
August 01, 2017 08:45 ET (12:45 GMT)