Official figures show that US consumer spending was unchanged in May for the first time in almost a year, probably reflecting a plunge in car sales.
The flat reading in consumer spending came after 10 straight months of gains, the Commerce Department said, and followed a downwardly revised 0.3% gain in April.
Economists had expected spending, which accounts for about 70% of US economic activity, to gain only 0.1% last month.
When adjusted for inflation, spending fell 0.1% in May, declining for a second straight month.
Spending last month was probably held back by a sharp drop in motor vehicle purchases as disruptions to production due to a shortage of parts in the aftermath of Japan's March earthquake and tsunami left some models out of stock.
May's weak reading suggests that consumer spending, which has been hampered by high petrol prices, in the second quarter will be much slower than the 2.2% annual rate recorded in the first three months of the year.
While the report fits in with other data illustrating the loss of momentum in the economy, falling petrol prices should lift spending and therefore growth in the third quarter. Petrol prices have dropped significantly from their peak in early May.
Despite retreating petrol prices, underlying inflation pressures continue to build. The personal consumption expenditures price (PCE) index rose 0.2% after rising 0.3%. But the annual increase was 2.5%, the largest rise since January 2010, after increasing 2.2% in April.
The core PCE index - excluding food and energy - increased 0.3%, the largest increase since October 2009. The core index, which is closely watched by Federal Reserve officials, increased 1.2% in the 12 months to May, the biggest increase since August.
Incomes rose 0.3% last month, slightly below expectations for a 0.4% increase. Incomes gained 0.3% in April. Disposable incomes adjusted for inflation edged up 0.1%.
