U.S. consumer spending increased solidly in June as households spent more on restaurants and accommodation, building a strong base for the economy heading into the third quarter, while inflation rose moderately.
The Commerce Department said on Tuesday consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.4 percent last month. Data for May was revised up to show consumer spending advancing 0.5 percent instead of the previously reported 0.2 percent increase.
Last month's increase in consumer spending was in line with economists' expectations. The data was included in last Friday's second-quarter gross domestic product report, which showed consumer spending accelerating at a 4.0 percent annualized rate during that period after a pedestrian 0.5 percent pace in the first quarter.
The economy grew at a 4.1 percent rate in the second quarter, almost double the January-March period's 2.2 percent pace and the strongest performance in nearly four years. June's increase in consumer spending sets it on a higher growth path heading into the third quarter.
Consumer spending last month was boosted by spending at restaurants and on accommodation. Spending on goods was unchanged after surging 0.9 percent in May.
Spending on services accelerated 0.6 percent after rising 0.3 percent in the prior month.