WASHINGTON: US personal spending growth accelerated by more than forecast in August, reflecting an increase in outlays for non-durable goods, while a closely watched measure of inflation exceeded estimates.
Purchases of goods and services increased 0.8 percent from a month earlier, following a downwardly revised 0.1 per cent decline in July, Commerce Department figures showed Friday, report agencies.
The figures suggest that consumer demand remained robust in August, despite a rise in Covid-19 infections. The spending increase was driven by a jump in goods outlays - specifically food and household supplies - likely reflecting a shift away from activities like dining out and travel due to heightened health concerns.
The median estimate in a Bloomberg survey of economists called for a 0.7 per cent month-over-month increase in total spending and a 0.3 per cent rise in the price index.
Adjusted for inflation, spending in August also picked up after falling the previous month. Real personal outlays rose 0.4 per cent in August after a revised decline of 0.5 per cent in the prior month.
Inflation-adjusted spending on services rose 0.3 per cent from a month earlier, marking a deceleration from the 0.7 per cent gain in July. Merchandise outlays climbed 0.6 per cent after a 2.6 per cent drop, the report showed.
Supply has struggled to keep up with rapidly recovering demand since the start of this year, with companies looking to fill a record number of open positions and acquire the materials needed for production. Those constraints have pushed prices higher and corroded Americans’ buying power. The core PCE, which excludes food and energy, rose 0.3 per cent for a second month. The measure was up 3.6 per cent from a year earlier, matching the highest since 1991.
“It’s very difficult to say how big the effects will be in the meantime, or how long they will last, but we do expect that we’ll get back, we’ll get through that,” Mr Powell said Wednesday while participating in a virtual panel event.