U.S. user spending increased more than expected in June if Americans paid more for goods and services, with monthly inflation soaring the most since 2005.
User spending, which accounts for more than two-thirds of US economic activity, increased 1.1% last month, the Commerce Department said on Friday. Data for May has been checked to show spending gained 0.3% instead of the 0.2% previously reported.
Economists reviewed by Reuters instead forecast user spending to increase by as much as 0.9%. These data are summarized in the preliminary crude state output report for the second quarter, published on Thursday overnight. The report showed inflation-adjusted user spending increased at the slowest rate in two years amid a slump in purchases of goods, particularly food, due to higher prices.
Output in the crude state peaked at an annual rate of 0.9% in the free term after declining to 1.6% in the first term.
Inflation increased in June. The personal use shopping price index (PCE) jumped 1.0% last month. It was the biggest increase since September 2005 and was followed by a 0.6% increase in May. In the 12 months to June, the PCE price index increased 6.8%, the largest increase since January 1982. The PCE price index increased 6.3% year-on-year in May.
Excluding the volatile food and labor components, the PCE price index increased 0.6% after rising 0.3% in May. The PCE core price index increased 4.8% on a year-on-year basis in June after rising 4.7% in May.
The Fed on Thursday raised the base rate by three-quarters more than the hundredth eye. He has now raised that rate by 225 basic points since Mac. Overall, it carries an indication that inflation is growing more rapidly and users are getting more and more impressed.
