US consumer spending unexpectedly fell for the first time in seven months in August but inflation showed signs of accelerating.

The data was mixed signals that could keep the Federal Reserve cautious about raising interest rates. 

The Commerce Department said that consumer spending, which accounts for more than two-thirds of US economic activity, fell 0.1% last month after accounting for inflation. 

Analysts polled by Reuters had expected a 0.1% gain. 

Robust consumer spending partially offset weak business investment and falling business inventories in the second quarter when the economy expanded at a lacklustre 1.4% annual rate. 

Overall economic growth could still accelerate in the current quarter even with August's slight decline in consumer spending, although households appear to spending with less gusto than in prior months. 

Consumer spending has been driven by a tightening labour market, which Fed Chair Janet Yellen said this week might be lifting incomes. Personal income rose 0.2%in August, in line with expectations. 

US consumer prices also rose about as much expected, with the price index outside food and energy increasing 0.2% from the previous month. 

That left inflation outside food and energy at 1.7% in the 12 months to August, up a tenth of a percentage point from the prior month and closer to the Fed's 2% inflation target. 

Yellen said last week she expected the US Fed would raise interest rates once this year to keep the economy from eventually overheating.