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US Jan personal spending up, prices rise

The Commerce Department reported that January personal spending rose by 0.4 per cent, while personal income rose by 0.3 percent. Analysts polled by Reuters had forecast both personal income and spending to rise by 0.2 per cent.

When adjusted for inflation, however, spending was unchanged, due largely to rising food and energy costs.

“Spending was a little hot but at the same time the cost of food and energy are skyrocketing so that’s not that surprising. At the same time, it was higher than what people thought,” said Beth Malloy, bond market analyst at Briefing.com in Chicago.

Prices for U.S. Treasury bonds were steady at higher levels while U.S. stock index futures trimmed losses slightly following the report.

The personal consumption expenditure price index, a key measure of inflation, rose 0.4 percent in January after an upwardly revised increase of 0.3 per cent in December. Excluding volatile food and energy costs, the personal consumption expenditure index rose 0.3 per cent - in line with analysts’ expectations and the steepest monthly rise since September 2007.

On a year-over-year basis, this core index rose 2.2 per cent, matching the prior month’s gain.

The overall index surged 3.7 percent in January from a year ago, reflecting higher food and energy costs. That was the highest year-on-year increase since September 2005 when it rose 3.9 per cent, a Commerce Department spokeswoman said.

Consumers dug into their savings for a third straight month in January, as the personal savings rate stood at a negative 0.1 percent of disposable personal income.