Consumer spending in the U.S. continued to grow in the last month of the first quarter as increasing food and gasoline prices pushed inflation to its largest annual gain in nearly a year, according to Reuters. On Friday, the Commerce Department reported that consumer spending in the U.S. added 0.6% in March from the previous month, marking the ninth month in a row of increases, despite slowing from the 0.9% growth posted the month prior. On Thursday, the government reported that consumer spending growth on an annual basis slowed to 2.7% in the first quarter of 2011 from the 4% rate during the previous three-month period.
The continued consumer spending growth came despite a 0.4% increase in prices during March and a year-over-year increase of 1.8%, which is the most since May of last year. Christopher Low of FTN Financial said, “Higher gas prices are forcing people to spend more at the expense of other items,” as core prices that exclude food and energy added just 0.1% on the month and 0.9% year-over-year. A separate report from Thomson Reuters/University of Michigan showed that the consumer sentiment index added more than two points to 69.8 in April from 67.5 previously.
