Updated

U.S. consumer spending rose at a sluggish pace in January, despite signs of growing optimism about the economy.

The Commerce Department says consumer spending increased 0.2 percent in January, after a 0.5 percent gain in December. Spending on services — from haircuts to health care — was flat, and Americans spent less on long-lasting goods such as autos and appliances.

Prices also rose in a sign that inflation has perked up a bit. A measure of inflation closely watched by the Federal Reserve rose 0.4 percent in January and has increased 1.9 percent in the past 12 months, the biggest year-over-year gain in more than four years.

That nearly matches the Fed's target of 2 percent and may make a rate hike by the Fed more likely this year.