U.S. consumer spending was unchanged in March for a second straight month and the overall monthly inflation rate fell for the first time in a year, confirming the weak domestic demand in the first quarter.
But when adjusted for inflation consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.3 percent, ending two straight months of decline, the Commerce Department said on Monday.
Economists polled by Reuters had forecast consumer spending, rising 0.2 percent. The data was included in last Friday's first-quarter gross domestic product report, which showed consumer spending increasing at a 0.3 percent annual rate — the slowest since the fourth quarter of 2009.
The economy grew at a 0.7 percent pace in the first quarter, the worst performance in three years. March's increase in real consumer spending sets it up for an acceleration in the second quarter. Consumption is likely to be supported by a pick-up in wage growth. A report on Friday showed private wages recorded their biggest increase in 10 years in the first quarter.
Spending in the first-quarter was constrained by a mild winter, which undercut demand for heating and utilities production. Delays by the government issuing income tax refunds as part of efforts to combat fraud also weighed on consumer spending as did rising inflation pressures.