Muristek
People shop at an H&M store during the grand opening of the The Hudson Yards development, a residential, commercial, and retail space on Manhattan's West side in New York March 15, 2019. — Reuters pic
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WASHINGTON, March 31 — US consumers spent less and saved more in February amid rising prices for a range of goods, even as their incomes continued to increase, government data showed today.
The Commerce Department reported personal consumption expenditures (PCE) rose 0.2 per cent last month, less than analysts had expected and much weaker than the upwardly revised 2.7 per cent increase in January.
Incomes rose 0.5 per cent, a figure in line with forecasts, as wages rose but prices ticked up 0.6 per cent compared to January and 6.4 per cent compared to February 2021, with costs for energy and food seeing big yearly gains.
PCE prices are the preferred inflation gauge of the Federal Reserve, and Lydia Boussour of Oxford Economics said the latest high reading confirms that central bankers are likely to raise interest rates repeatedly this year to bring price increases under control.
“US consumers will face hard choices in the coming months as surging prices of non-discretionary items such as food, energy, and shelter pressure their budgets and lead them to pare back some purchases and dip into their savings,” she said.
Boussour added that rising wages, low unemployment and built up savings could offset some of the hit.
Spending rose US$34.9 billion (RM146 billion) overall, the data said, with consumers channeling more of their dollars towards services like hotels and restaurants, and less towards goods such as automobiles, which are in short supply as manufacturers struggle to find semiconductors.
Food prices were up eight per cent compared to the same month last year, while energy prices had climbed 25.7 per cent. With those categories excluded, PCE prices were up 5.4 per cent compared to February 2021, still higher than the month before.
When adjusted for inflation, both disposable income and spending decreased by less than half a percentage point last month, the data said.
The report contained evidence that more Americans are holding on to their money amid the inflation wave, as the personal savings rate ticked up to 6.3 per cent with US$1.15 trillion in the bank.
Most of the increase in income was from wages and benefits, which was offset by decreases in government aid programs, according to the report. — AFP