Consumers increased their spending at the weakest pace in six months, while the 12-month rise in consumer prices was the biggest in nearly five years.
Consumer spending edged up 0.1 percent in February following a similarly sluggish 0.2 percent increase in January, the Commerce Department reported Friday. The small gains suggest that overall economic growth likely slowed in the first quarter.
Incomes, however, were up a solid 0.4 percent in February, offering hope for stronger consumer spending in the months ahead.
Meanwhile, an inflation gauge closely watched by the Federal Reserve increased 2.1 percent in February compared to a year ago. It is the sharpest 12-month rise since March 2012 and slightly above the Fed’s 2 percent inflation target.
The Fed raised a key interest rate in March, just three months after a hike in December. Officials have sent signals that the pace of rate hikes will accelerate this year