U.S. Personal Income And Spending Both Climb 0.4% In June

(RTTNews) - Personal income and spending in the U.S. both increased in line with economist estimates in the month of June, according to a report released by the Commerce Department on Friday.

The report said personal income increased by 0.4 percent in June, matching the increase seen in the previous month as well as economist estimates.

Disposable personal income, or personal income less personal current taxes, also rose by 0.4 percent in June after climbing by 0.4 percent in May.

Additionally, the Commerce Department said personal spending rose by 0.4 percent in June following an upwardly revised 0.3 percent increase in May.

Economists had been expecting spending to increase by about 0.4 percent compared to the 0.2 percent uptick originally reported for the previous month.

Meanwhile, the report said real spending, which is adjusted to remove price changes, edged up by 0.2 percent in June after inching up by 0.1 percent in May.

With income and spending both rising at the same rate, personal saving as a percentage of disposable personal income was unchanged from the previous month at 5.3 percent.

The personal income and spending report also includes readings on consumer price inflation that are favored by the Federal Reserve.

The Commerce Department said its personal consumption expenditures price index rose by 0.2 percent in June after climbing by 0.3 percent in May. The annual rate of growth slowed to 1.6 percent,

Core PCE prices, which exclude food and energy prices, edged up by 0.1 percent for the month and were up 1.5 percent year-over-year.

However, Paul Dales, Senior U.S. Economist at Capital Economics, noted that core prices are rising at a three-month annualized rate of 2.1 percent.

"Our forecast that core PCE inflation will rise to 2.0% early next year partly explains why we think the first rate hike will come in March," Dales said.