U.S. Personal Spending Unexpectedly Dips 0.1% In April

(RTTNews) - While the Commerce Department released a report on Friday showing that U.S. personal income rose in line with economist estimates in the month of April, the report also showed an unexpected drop in personal spending for the month.

The report said personal spending edged down by 0.1 percent in April after surging up by an upwardly revised 1.0 percent in March.

The modest decrease surprised economists, who had expected spending to rise by 0.2 percent compared to the 0.9 percent increase originally reported for the previous month.

The unexpected decrease marked the first drop in personal spending since April of last year.

Real spending, which is adjusted to remove price changes, showed a slightly steeper 0.3 percent drop in April compared to a 0.8 percent increase in March.

The drop in spending came despite a continued increase in personal income, which rose by 0.3 percent in April following a 0.5 percent increase in March. The increase marked the fourth straight month of growth and matched expectations.

Disposable personal income, or personal income less personal current taxes, also rose by 0.3 percent in April after climbing by 0.5 percent in the previous month.

With income rising and spending falling, personal saving as a percentage of disposable personal income climbed to 4.0 percent in April from 3.6 percent in March.

The Commerce Department also said its reading on consumer prices increased at an annual rate of 1.6 percent in April, reflecting a notable acceleration from the 1.1 percent growth seen in March. The increase reflected the fastest growth since November of 2012.

Core consumer prices, which exclude food and energy prices, increased at an annual rate of 1.4 in April compared to the 1.2 percent increase in March.

Peter Boockvar, managing director at the Lindsey Group, said, "While the inflation data was in line, the trend is up, and I continue to believe that the pace of increases will be faster than the Fed is forecasting."