US consumer spending jumped last month but inflation accounted for half of the gain, the government said today ahead of an expected Federal Reserve interest rate rise this week.
Personal spending was up 1% in May, the Commerce Department said, beating Wall Street forecasts for a 0.8% gain and posting the biggest advance since October 2001's 2.4% rise.
April's gain in spending was revised down slightly to 0.2% from the originally reported 0.3% rise.
The euro slipped slightly against the dollar as dealers bet the Fed may signal it will raise interest rates faster than expected after the Federal Open Market Committee meeting.
The Fed is expected to hike interest rates for the first time in 4 years, from their 1958-low of 1%, at the end of a two-day gathering which starts tomorrow. Fed officials have said they can tighten monetary policy at a measured pace, but also want to assure markets that they will keep US inflation under control.
