US personal spending gains slightly, inflation decelerates

US personal spending gains slightly, inflation decelerates

Data released on Friday signaled a slight gain in U.S. personal spending in May, while inflation decelerated, raising questions about the Fed’s pledge to hike rates and withdraw stimulus.

Personal spending rose a meagre 0.1 percent in May, matching forecasts, compared to a 0.4 percent soar in April.

Personal income for the same period surged 0.4 percent, following a revised 0.3 percent gain in April.

This meant that Americans benefited from rise in their incomes but refused to spend more, keeping pressure on economic growth in the second quarter. 

Annual consumer spending grew just 1.1 percent in the first quarter, resulting in a weak annual growth of 1.4 percent in the first three months of this year. 

Core PCE price index, the Fed’s favorite measure of inflation, reported an annualized 1.4 percent rise from May, while signaled a 0.1 percent rise on the month.

The annual inflation index has been slowing since April, taking steps away from the Fed’s two percent inflation target.

The dollar index traded higher at 96.85, snapping its earlier losses when it hit a bottom of 95.43, as of 13:00 GMT.

Ahmed Mamdouh

Ahmed Mamdouh, Co-Founder and Head of English Fundamental Analysis at FXComment.com, with 7 years of experience in the financial markets. Mamdouh holds a Master’s Degree in Economics from The American University in Cairo and a Bachelor Degree in Economics from The Faculty of Economics and Political Science, Cairo University.

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