Consumer spending up 0.8 percent in June

WASHINGTON (Reuters) – U.S. consumer spending advanced a
robust 0.8 percent in June as shoppers took to auto showrooms
to enjoy sales incentives that helped keep inflation in check,
a government report showed on Tuesday.

Income in June rose 0.5 percent, the Commerce Department
said, a touch stronger than the 0.4 percent gain analysts on
Wall Street had expected. The increase in spending, which was
already reflected in a report on second-quarter economic growth
released on Friday, was as expected.

An inflation index contained in the spending and income
report showed prices steady, both overall and excluding
volatile food and energy costs. Economists had expected the
non-food and energy gauge to edge up 0.1 percent.

Over the past year, this core price index — eyed closely
by policy-makers at the Federal Reserve — is up 1.9 percent,
at the high end of the central bank’s perceived comfort zone.
However, a narrower measure that looks only at prices that can
be observed in markets, showed a more moderate rise of 1.6
percent.

The burst in consumer spending in June represented a
rebound from weak sales in May and showed the economy closing
out the second quarter on a strong note.

Taking into account the bite from taxes, consumer income
was still up 0.5 percent.

June’s strong spending pushed the saving rate, the percent
of disposable income socked away by consumers, down to zero –
the lowest since October 2001, just after the Sept. 11 attacks.