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Consumer spending in the United States increased only 0.2% in May, a disappointing result after two months of much larger gains. Meanwhile, inflation rose 2.3% for the 12-month period ended in May, the highest level in six years.
The Commerce Department said Friday that the tiny increase in spending last month followed much larger increases, by 0.6% in March and 0.5% in April. This is the worst result since the index fell 0.1% in February.
Consumer spending accounts for 70% of the country's economic activity and economists expect solid gains to stimulate growth after a slow start to the year. But the weak result of May could lead to questioning the forecast. Before the report, many economists were expecting an increase of about 0.5%.
Inflation, according to a leading indicator of the Federal Reserve, was 0.2% higher in May and 2.35 in the last 12 months. This is the fastest pace since 2012 and keeps inflation above the Fed's optimal annual target of 2%. However, the central bank said it was ready to let inflation exceed 2% for a while, since it had been below the mark for six years.
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