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Consumer spending posts tiny gain

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Latest MoneyWatch headlines 01:08

WASHINGTON - U.S. consumers increased their spending last month at the weakest pace in six months, while the 12-month rise in consumer prices was the largest in nearly five years.

The Commerce Department said consumer spending edged up a tiny 0.1 percent in February following a 0.2 percent increase in January. The small gain supports the view of many economists that overall economic growth probably slowed in the first quarter.

Incomes, however, were up a solid 0.4 percent in February, offering hope for stronger consumer spending in coming quarters.

Meanwhile, an inflation gauge closely watched by the Federal Reserve – called personal consumption expenditures, or PCE – increased at an annual rate of 2.1 percent in February compared to a year ago. That’s the sharpest 12-month rise since March 2012 and slightly above the Fed’s 2 percent inflation target.

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