Consumer spending surged 0.9% in May to mark the biggest gain in six years, as consumers splurged on new autos but also spent more to fill up their gas tanks. Spending for April and March were also raised a bit, according to revised figures from the Commerce Department. Personal income, meanwhile, rose a solid 0.5% for the second month in a row, the government said Thursday. Economists polled by MarketWatch had forecast a seasonally adjusted 0.8% increase in spending and a 0.5% gain in income. Since spending grew faster than incomes, the amount of money individuals save dropped to 5.1% from 5.4%. Also, spending in April war revised up to 0.1% from zero and spending in March was raised to 0.6% from 0.5%. Meanwhile, inflation as gauged by the PCE price index rose 0.3% in May. The PCE index has risen just 0.2% in the past 12 months, however. The core PCE index that excludes food and energy edged up 0.1% in May. The core rate rose at a 1.2% pace year over year, down from 1.3% in April. The low level of inflation is a big reason why the Federal Reserve has refrained from raising U.S. interest rates.
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