WASHINGTON – U.S. consumer spending rose 0.3 percent in November but a big drop in energy costs and scant inflation elsewhere boosted shoppers' buying power even more sharply, the government said on Thursday.
Taking into account a record 0.4 percent decline in overall prices, consumer spending rose a steep 0.7 percent last month, the Commerce Department said. Personal income climbed 0.3 percent, or 0.7 percent when adjusted for inflation.
But falling energy prices were not the only welcome news on the price front. Excluding volatile food and energy costs, the department's price index for consumer spending — the Federal Reserve's favorite inflation gauge — edged up just 0.1 percent.
The mild rise in core inflation put the year-on-year increase at 1.8 percent, below an upwardly revised 1.9 percent gain in October.
The report was close to Wall Street expectations, although spending was a touch softer and inflation a bit better contained than had been expected. Economists had forecast a 0.4 percent gain in spending, a 0.3 percent increase in income and a 0.2 percent gain in the core price index.
Despite their steadily rising incomes, the report showed consumers continued to dip into savings or tap their assets to fuel spending.
The personal saving rate, the percentage of after-tax income socked away, held steady at a negative 0.2 percent in November — a sixth straight month in negative territory.