U.S. consumer spending accelerated in July, but slowing inflation strengthened expectations that the Federal Reserve would keep interest rates unchanged next month.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.8% last month, the Commerce Department reported on Thursday. Data for June was revised up to show spending rising 0.6% instead of 0.5% as previously reported.Spending was boosted by outlays on both goods and services. Slowing inflation and a still tight labor market, which is keeping wage gains elevated, are supporting consumer spending and propping up the economy.at a 2.
Inflation as measured by the personal consumption expenditures price index rose 0.2% last month, matching June's gain. In the 12 months through July, the PCE price index increased 3.3% after advancing 3.0% in June. The annual PCE inflation rates were lifted by a lower base of comparison last year. The Fed tracks the PCE price indexes for its 2% inflation target.
Initial claims for state unemployment benefits fell 4,000 to a seasonally adjusted 228,000 for the week ended Aug. 26, the Labor Department said in a separate report on Thursday. Economists had forecast 235,000 claims for the latest week.
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