US personal income and spending up more than expected

Data released by the Commerce Department on Friday showed US personal spending rose 0.5% in January, beating economists’ expectations for a 0.3% increase.

Personal spending had advanced 0.1% in December.

Personal income also rose 0.5% in January from December, surpassing expectations for a 0.4% gain.

Meanwhile, the core personal consumption expenditure (PCE) price index was up 0.3% on the month in January, and 1.7% on the year, versus expectations for 0.2% and 1.2% gains, respectively.

Pantheon Macroeconomics said: “Markets have ignored the steady increase in core CPI inflation over the past year, but they can't ignore this. Adding back the Fed's own estimate of the impact of temporary factors on core PCE - Yellen said a quarter-to-a-half percent on Dec 2 - the underlying core rate is now at 2-to-2.3%, at or above the Fed's target.”