1 October 2010, 18:05  US spending rise in Augus

Official figures show that US consumer spending rose by slightly more than expected in August, but inflation remained subdued. The Commerce Department said spending increased 0.4% after rising by the same margin in July. Economists had expected a smaller rise of 0.3%. Spending accounts for about 70% of US economic activity. The Federal Reserve's preferred measure of consumer inflation - the personal consumption expenditures price index, excluding food and energy - rose by only 0.1% for a fourth straight month. The annual increase was 1.4% for the third consecutive month. The Federal Reserve warned last week that underlying inflation was below levels viewed as consistent with the US central bank's mandate of full employment and price stability. It said it was ready to pump more money into the economy to shore up growth and avert a harmful downward spiral in prices. In August, spending was supported by a 0.5% rise in personal income, the largest rise since December, the Commerce Department report showed. The rise in incomes was above market expectations for a 0.3% increase. Spending adjusted for inflation rose 0.2% after a similar gain in July. The fourth straight month of gains offered hope that consumers continued to prop up economic growth in the third quarter. With spending a touch below the 0.5% rise in disposable income, the saving rate edged up to 5.8% from 5.7%.

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