U.S. consumers barely increased spending in February in another signal that the economy slowed in the first quarter. Consumer purchases edged up a scant 0.1% last month after two straight declines, the Commerce Department said Monday. Economists polled by MarketWatch were looking for a seasonally adjusted 0.3% gain. Softer auto sales and harsh winter weather that kept people indoors likely contributed to small increase in spending, though Americans did spend more on gasoline for the first time in months. Personal incomes, meanwhile, rose 0.4% for the fourth time in a five months, perhaps evidence that rapid hiring is forcing companies to offer somewhat higher wages to attract workers. With Americans earning more and spending less, the savings rate climbed for the third straight month to 5.8%, the highest level since the end of 2012. Meanwhile, inflation as gauged by the Federal Reserve's preferred PCE index rose 0.2% in February. The index has risen just 0.3% in the past 12 months, however, because of a plunge in oil prices that has reduced overall inflation. The central bank would like to see the PCE rate rise to 2%. The core PCE index that excludes food and energy increased a mild 0.1% in February, and it was up 1.4% in the past 12 months.
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