Official figures show that US consumer spending rose by less than expected in January as households took advantage of the largest increase in incomes in more than 18 months to rebuild their savings.
The Commerce Department said spending edged up 0.2%, the smallest increase in seven months, after an upwardly revised 0.5% rise in December. It was still the seventh straight month of gains.
Real spending - spending adjusted to take account of inflation - fell 0.1%, the first decline in a year. The drop in real spending offered an early confirmation that spending would slow down after rising sharply in the last three months of 2010. Spending in the fourth quarter grew at a 4.1% annual rate, the fastest in more than four years.
Incomes rose 1% last month, the largest increase since May 2009, after increasing 0.4% in December. The increase in January outpaced economists' expectations.
Savings jumped to $677.1 billion, the highest level since August, from $620.9 billion in December.
The report also showed the Federal Reserve's preferred measure of consumer inflation - the personal consumption expenditures price index, excluding food and energy - edged up 0.1% last month, after being unchanged in December.
