US consumers spent less money during March than economists had suspected, and much of that extra cash went into paying higher prices for goods, a report showed today.
Personal spending rose 0.4 per cent in March, the Commerce Department said, well below market expectations of a 0.7 per cent gain. Adjusted for inflation, spending advanced a meagre 0.1 per cent.
Nonetheless, spending increases for the prior two months were revised upward, which would explain a robust 4.2 per cent first quarter growth rate reported on yesterday.
Today's report showed inflation picking up a bit last month, with a price index for consumer spending advancing 0.3 per cent. The core measure, which strips out food and energy costs, rose 0.2 per cent.
Higher prices pushed the year-on-year core inflation reading - a favorite of Federal Reserve chairman Mr Alan Greenspan - to a gain of 1.4 per cent, the biggest rise in just over a year.