WASHINGTON — U.S. consumer spending increased in May even as inflation accelerated, according to data released by the Commerce Department on Thursday, indicating that household demand remained resilient despite continued price pressures.
The Bureau of Economic Analysis said personal consumption expenditures, a key measure of consumer spending, rose from the previous month, while the Personal Consumption Expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge, posted its largest annual increase in several years. The figures were released ahead of policymakers' next assessment of the economic outlook.
The Commerce Department reported that consumer spending increased across both goods and services. Spending on health care, housing and utilities, financial services and gasoline contributed to the monthly gain, while real consumer spending also advanced after adjusting for inflation. The department said the PCE price index continued to move above the Federal Reserve's 2% target, reflecting persistent inflationary pressures.
Economists said the combination of firm household spending and elevated inflation is likely to remain an important factor for monetary policymakers. Financial markets continue to monitor incoming economic data for indications of the Federal Reserve's next policy move, although no decision has been announced.
Consumer surveys released on Friday suggested that households remain concerned about the cost of living despite a modest improvement in sentiment. The University of Michigan's latest survey found that more than half of respondents continued to cite high prices as a financial burden. "Consumers continue to express concerns over the high cost of living," the survey said.
The latest spending figures suggest household expenditures have remained supported even as inflation has reduced purchasing power for many consumers. However, officials have not indicated that recent data represent a lasting trend, and future economic conditions will depend on subsequent inflation, employment and income reports.
As of Saturday, no new policy measures had been announced in response to the latest spending and inflation data. Federal Reserve officials have continued to state that future decisions will depend on incoming economic information, while additional government economic reports are scheduled for release in the coming weeks.
