Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 1.1% last month, the Commerce Department said on Friday. Data for May was revised up to show outlays gaining 0.3% instead of 0.2% as previously reported.
Economists polled by Reuters had forecast consumer spending would accelerate by 0.9%.
The data was included in the advance gross domestic product report for the second quarter, which was published on Thursday. That report showed inflation-adjusted consumer spending increased at its slowest pace in two years amid declines in purchases of goods, particularly food, because of higher prices.
Gross domestic product contracted at a 0.9% annualized rate last quarter after declining at a 1.6% pace in the first quarter.
Inflation heated up in June. The personal consumption expenditures (PCE) price index jumped 1.0% last month. That was the largest increase since September 2005 and followed a 0.6% gain in May. In the 12 months through June, the PCE price index advanced 6.8%, the largest increase since January 1982. The PCE price index rose 6.3% year-on-year in May.
Excluding the volatile food and energy components, the PCE price index shot up 0.6% after climbing 0.3% in May. The so-called core PCE price index increased 4.8% on a year-on-year basis in June after rising 4.7% in May.
The Federal Reserve on Wednesday raised its policy rate by another three-quarters of a percentage point. It has now hiked that rate by 225 basis points since March.
Source: Economy - investing.com
