US government figures show that rising petrol and food prices lifted US consumer spending in March. The annual increase in prices was also the largest in 10 months.
The Commerce Department said consumer spending increased 0.6%, rising for a ninth straight month, after an upwardly revised 0.9% advance in February.
Economists had expected spending, which accounts for about 70% of US economic activity, to rise 0.5% in March. When adjusted for inflation, spending edged up 0.2% last month after rising 0.5% in February.
The US government reported on Thursday that consumer spending grew at a 2.7% annual rate in the first quarter after a 4% increase in the final three months of 2010.
The moderation in spending was not as sharp as economists had feared, suggesting that consumers were somewhat adapting to the high commodity prices. But spending could face a tougher test should petrol prices rise further.
High food and energy prices kept inflation elevated last month, with the personal consumption expenditures price (PCE) index up 0.4% after rising by the same margin in February. Compared to March last year, the index was up 1.8% - the largest increase since May - after rising 1.6% in February.
The core PCE index - excluding food and energy - slowed to a 0.1% increase after rising 0.2% in February. The core index, which is closely watched by Federal Reserve officials, increased 0.9% in the 12 months to March.
Incomes increased 0.5% last month after climbing 0.4% in February. That compared with economists' expectations for a 0.4% gain. The savings rate was unchanged at 5.5%.
