Personal Spending Rises 0.4% in January

Consumer personal spending rose at a rate of 0.4% in January, the Commerce Department said Friday.

The gain followed a revised 0.3% increase in December.

Personal incomes in January rose 0.3% following a 0.5% gain the previous month, Commerce said.

The spending gain was higher than economists’ forecasts of a 0.2% increase, Bloomberg reported. However, the increase in personal consumption was mostly the result of consumers paying higher prices for goods, due to rising inflation, economists told Bloomberg.

The Commerce Department’s Consumer Price Index, an inflation gauge watched closely by the Federal Reserve, posted a 0.4% increase in January. The so-called “core” CPI, which excludes volatile food and energy costs, rose 0.3% in January, the biggest gain since June 2006.

An increase in consumer spending could increase demand for new factory goods and the trucking shipments that get them to stores.