US Consumers Spend More In January Than Expected

WASHINGTON -(Dow Jones)- Americans spent more in January than expected but growth of their income was weak, while a gauge of inflationary pressure within the slowly recovering economy rose at a slower rate.
Personal income increased by 0.1% compared to the prior month, while personal spending climbed by 0.5%, the Commerce Department said Monday. The saving rate slowed to the smallest since 2008.
Economists surveyed by Dow Jones Newswires forecast a 0.4% increase in income and a 0.4% increase in spending for January.
Income has gone up six straight months and spending has increased four straight times.
The better-than-expected reading on spending took some of the sting out of a report Friday showing the government lowered its fourth-quarter estimate on consumer spending, to a 1.7% increase from a 2.0% increase.
The fourth-quarter spending number was part of a revision to gross domestic product for October through December. The lowered estimate caused concern about the strength of the economic recovery. Consumer spending makes up 70% of GDP, the broad measure of U.S. economic activity.
As the economy struggles to improve, a price gauge closely watched by the U.S. Federal Reserve decelerated in January. The core price index for personal consumption expenditures, which excludes volatile food and energy, rose 1.4% compared to January 2009. It was 1.5%, year over year, in December 2009. The Fed checks the index for signs of inflationary pressure within the economy, which is slowly recovering from recession.
Monthly, the core index was unchanged in January compared to the prior month.
The PCE price index including food and energy prices rose 0.2% in January compared to December and climbed 2.1% year over year.
The report on income said private wages and salaries accelerated in January. But rental income fell.
The saving rate in January was the lowest since 2.9% in October 2008. The rate was 3.3% in January, compared to 4.2% in December.
Prior month data were revised. The Commerce Department reported that personal income rose 0.3% in December, compared to a previously reported 0.4% rise. It said personal spending climbed 0.3%, compared to the 0.2% increase that was reported earlier.