US consumer spending slows as inflation erodes purchasing power
The surge in US inflation raises the possibility of a much-anticipated rate increase from the Federal Reserve this month
Washington — US consumer spending rose less than expected in January as the largest monthly increase in inflation in four years eroded households’ purchasing power, pointing to moderate economic growth in the first quarter. The surge in inflation raises the possibility of an interest rate increase from the Federal Reserve this month. While still below the US central bank’s 2% target, inflation is now in the upper end of the range that Fed officials, in December, felt would be reached this year. The US commerce department said on Wednesday that consumer spending, which accounts for more than two-thirds of US economic activity, increased 0.2% after rising 0.5% in December. Economists polled by Reuters had forecast consumer spending gaining 0.3% in January. Consumer spending is likely to remain supported amid promises by the Trump administration of sweeping tax cuts and increased infrastructure spending. In a speech to Congress on Tuesday night, President Donald Trump said his economic...
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