By Alice Seeley
According to new data released by the Commerce Department, U.S. Consumer spending increased at a slower rate than expected, rising by 0.2% in February due to current inflation.
After price adjustment for inflation, U.S. consumer spending on goods decreased by 0.4% from the prior month. There was also a significant decrease in vehicle, recreational goods, and clothing sales. However, consumers spent more than ever on gasoline. In February, gasoline sales increased by $27.1 billion, following a 2.1% increase in consumer spending in January.
The Commerce Department also reported that inflation rose by 0.6% in February, with the cost of energy increasing 25.7% and food prices increasing 8.0% in the same month. Earlier this month, the Bureau of Labor reported that consumer prices increased by 7.9% in February 2022 compared to February 2021. This number increased by 0.3% from January and is the highest inflation since January 1982.
Surprisingly, consumer spending on goods is 7.7% above the pre-pandemic level, while consumer spending on services is 4% below the pre-pandemic level.
The good news is that, according to the same report, personal income increased slightly in February. In February, personal income increased by 0.5% to $101.5 billion. This increase was partly because of a decrease in government social benefits. Disposable personal income also increased by 0.4% to $76.1 billion as well as personal consumption expenditures increased by 0.2% to $34.9 billion. Consumers have about $2.3 trillion in savings right now.