US consumer spending increased by the biggest gain in more than nine and a half years in March, new figures show today.
But price pressures remained muted, with a key inflation measure posting its smallest annual gain in 14 months.
The surge in consumer spending reported by the Commerce Department today sets a stronger base for growth in consumption heading into the second quarter after it slowed sharply in the first three months of the year.
Tame inflation, however, supports the Federal Reserve's recent decision to suspend further interest rate increases this year.
Fed officials are scheduled to meet today and Wednesday to assess the economy and deliberate on the future course of monetary policy.
The Fed in March dropped forecasts for any interest rate increases this year, halting a three-year policy tightening campaign. The Fed raised borrowing costs four times in 2018.
Consumer spending, which accounts for more than two-thirds of US economic activity, surged 0.9% as households stepped up purchases of cars and spent more on healthcare.
US consumer spending edged up 0.1% in February. Data for January was also revised up to show consumer spending rising 0.3% instead of the previously reported 0.1% gain.
The release of the February spending data was delayed by a five-week partial shutdown of the federal government that ended on January 25.
Economists polled by Reuters had forecast consumer spending jumping 0.7% in March.
When adjusted for inflation, US consumer spending increased 0.7% in March.
March's surge in real consumer spending suggested an acceleration in consumption was likely in the second quarter.
Consumers spending increased at a 1.2% annualised rate inthe first quarter, the slowest in a year.
The overall US economy grew at a 3.2% rate last quarter.