WASHINGTON (Reuters) – U.S. household consumer spending slowed significantly in February as inflationary pressures intensified again.
Consumer spending, which accounts for more than two-thirds of economic activity in the United States, rose 0.2% last month after rising 2.7% in January (+2.1% in first estimate ), show figures released Thursday by the Commerce Department.
Economists polled by Reuters on average forecast a 0.5% rise in February.
Households have been forced to cut spending, as their purchasing power has been eroded by higher rents, food and fuel.
Gasoline prices soared in February and topped $4 a gallon this month after Russia invaded Ukraine on February 24.
The PCE consumer price index rose 0.6% in February after rising 0.5% in January. Over one year, the increase stands at 6.4% – the largest since 1982 – after +6.0% in January.
The core PCE index, which excludes energy and food, rose 0.4% after rising 0.5% in January. Over one year, this inflation indicator favored by the Federal Reserve jumped 5.4% in February, the largest increase since 1983, after 5.2% in January.
The Federal Reserve raised its interest rates earlier this month for the first time in more than three years and could embark on an accelerated tightening of its monetary policy in the face of inflation.
Although rising prices are eating away at consumers’ budgets, consumers are enjoying some protection thanks to massive savings built up during the pandemic as well as rising wages amid labor shortages.
(Report by Lucia Mutikani; French version Dina Kartit, edited by Jean-Stéphane Brosse)
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