Washington — US consumer spending increased solidly in July, pointing to strong economic growth early in the third quarter, while a measure of underlying inflation hit the Federal Reserve’s 2% target for the third time in 2018. Other data on Thursday showed an increase in new applications for unemployment benefits last week, but the underlying trend continued to point to a robust labour market. Strong domestic demand, rising inflation and a tightening jobs market will probably keep the US central bank on course to increase interest rates for a third time in 2018 in September. The commerce department said consumer spending, which accounts for more than two-thirds of US economic activity, rose 0.4% in July after advancing by the same margin in June. Households spent more at restaurants and on accommodation in July. There was also an increase in spending on prescription medication. Economists polled by Reuters had forecast consumer spending rising 0.4% in July. With demand strong in Ju...
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