consumer spending rises, inflation pressures muted
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[August 01, 2014]
WASHINGTON (Reuters) - U.S.
consumer spending rose for a fifth straight month in
June, but a moderation in price increases suggested the
Federal Reserve will not raise interest rates anytime
The Commerce Department said on Friday consumer spending increased
0.4 percent after rising by an upwardly revised 0.3 percent in May.
Spending, which accounts for more than two-thirds of U.S. economic
activity, had been forecast rising 0.4 percent after a previously
reported 0.2 percent gain in May.
When adjusted for inflation, consumer spending increased 0.2 percent
after edging up 0.1 percent the prior month.
The data was included in Wednesday's gross domestic product report,
which showed the economy expanded at a 4.0 percent annual pace in
the second quarter after shrinking at a 2.1 percent rate in the
Consumer spending in the second quarter increased at a 2.5 percent
pace and the rise in June augurs well for an acceleration in
spending in the third quarter.
Spending is being supported by steady gains in income, which rose
0.4 percent in June, thanks to an improving labor market.
Despite the gains in spending, inflation retreated in June.
A price index for consumer spending rose 0.2 percent after advancing
0.3 percent in May. In the 12 months through June, the personal
consumption expenditures (PCE) price index rose 1.6 percent. It had
increased 1.7 percent in May.
Excluding food and energy, prices edged up 0.1 percent after gaining
0.2 percent the prior month. The so-called core PCE price index is
the Federal Reserve's preferred inflation measure.
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It increased 1.5 percent from a year ago, still below the Fed's 2
percent target, after rising by the same margin in May.
The Fed on Wednesday changed its tone on inflation, saying "the
likelihood of inflation running persistently below 2 percent has
The U.S. central bank, which is scaling back the amount of money it
is pumping into the economy through monthly bond purchases, has kept
its benchmark lending rate near zero since December 2008.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
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