US consumers spent at a solid pace in July while the key PCE index of inflation slowed, the Commerce Department reported Monday.
Consumer spending rose by 0.3% from June, with the gain underpinned mainly by automobile purchases while spending on non-durable goods and services declined, AFP reported.
That followed a 0.4% gain in June, suggesting the consumer side of economic growth was firm at the start of the third quarter.
The spending gain was underpinned by a 0.4% rise in personal income in July, solid for the month but year-on-year up a more modest 2.7%.
Inflation was still weak. The personal consumption expenditures price index was flat for the month and up 0.8% year-on-year, slower than a month before.
With volatile food and fuel stripped out, PCE inflation -- the Federal Reserve’s preferred measure of price pressures -- was up 0.1% in the month and 1.6% from a year ago, still well below the Fed’s 2.0% target level.
The spending and income data pointed to a firm rebound in US economic growth in the third quarter, said Ian Shepherdson of Pantheon Macroeconomics.
