U.S. consumer spending increased by the most in seven months in October, but underlying price pressures slowed, with an inflation measure tracked by the Federal Reserve recording its smallest annual increase since February.
The Commerce Department said on Thursday consumer spending, which accounts for more than two-thirds of U.S. economic activity, jumped 0.6 percent last month as households spent more on prescription medication and utilities.
Data for September was revised down to show spending rising 0.2 percent instead of the previously reported 0.4 percent gain.
Economists polled by Reuters had forecast consumer spending increasing 0.4 percent in October. When adjusted for inflation, consumer spending advanced 0.4 percent, also the biggest gain in seven months and pointing to a solid pace of consumption at the beginning of the fourth quarter.
Despite the strong consumer spending, there are indications that economic growth is slowing. Data this month suggested a moderation in business spending on equipment, a deterioration in the trade deficit as well as further weakness in the housing market. Growth estimates for the fourth quarter are currently around a 2.5 percent annualized rate. The economy grew at a 3.5 percent pace in the July-September quarter.
In October, spending on goods surged 0.5 percent after gaining 0.1 percent in September. Outlays on services shot up 0.7 percent after rising 0.3 percent the prior month.