US consumer spending growth slowed in April, rising a slimmer-than-expected 0.6 per cent, but shoppers got a little more for their money as inflation eased a bit, a government report showed today.
The rise in personal spending followed an upwardly revised increase of 0.9 per cent in March, the Commerce Department said. Income rose 0.7 per cent.
Economists said the report did not alter the outlook for Federal Reserve interest-rate hikes. The Fed has said it expects to be able to push overnight rates up gradually and keep inflation at bay.
"The trend has been wholesale inflation but very low, contained consumer level inflation. That is what we are seeing, which will keep the Fed on a measured course," said Tim Mazanec, senior currency strategist at Investors Bank & Trust in Boston.
On an inflation-adjusted basis, spending rose just 0.2 per cent in April after an upwardly revised 0.4 per cent March increase.
The department's gauge for consumer inflation - favoured by policy-makers at the Federal Reserve - rose a hefty 0.4 per cent, but that was a bit less than in March, when it increased 0.5 per cent.
Stripping out volatile food and energy costs, prices rose just 0.1 per cent, the smallest increase since December and a slowdown from a 0.3 per cent March advance.
Over the 12 months through April, prices were up 1.6 per cent, a touch less than in the 12 months ended in March. Richard DeKaser, chief economist at National City Corp., said the 12-month rise in the so-called PCE price index was in the Fed's "comfort zone," but that it masked a swifter pace of increase seen in recent months. The personal saving rate, the per centage of disposable income socked away by consumers, moved down to 0.4 per cent, its lowest level since October 2001.
Wage and salary growth, which has been subdued for most of the US economy's current expansion, picked up in April, increasing 0.7 per cent after a 0.3 per cent March rise. However, the compensation gains still lagged the big increases seen in the fourth quarter of last year.