Consumer spending increased 0.1% in July from a month earlier, with an uptick in outlays on services and long-lasting goods and a decrease in gasoline spending.
The latest numbers, reported Friday (Aug. 26) by the Bureau of Labor Statistics (BLS), reflect a slowdown from June, which saw spending increase by 1%. Personal income was up 0.2% in July, the most since February, led by private wages and salaries.
While inflation is still at record highs, it eased 0.1 percent in July versus June. The saving rate was unchanged at 5%, still the lowest since 2009, according to the report.
Consumer spending accounts for more than two-thirds of U.S. economic activity. Rising interest rates are making mortgages and car loans more expensive, adding to already inflated prices for just about everything. Food prices increased 1.3% in July from June, while energy prices dropped 4.8%.
Consumers have been coping with the increase in prices in several ways, from store bargain hunting to leveraging restaurants’ affordability against high grocery prices.
The latest PYMNTS monthly series “Digital Economy Payments: Consumers Buy Into Food Bargains” showed that consumers sought bargains for whatever they were looking for, even travel.
Travel accounted for a portion of the $33.3 billion increase in personal consumption expenditures (PCE) of which $23.7 billion was for “other” services, mainly international travel, according to the BLS report.
Outside of basic purchases like groceries, gas and clothes, Americans earning over $125,000 annually are continuing to reel in credit and debit card spending, a Bank of America Institute study indicated Thursday (Aug. 25), PYMNTS reported.
Spending by those in higher income brackets fell by about 0.5% in July, the data showed, with consumers reducing travel expenses like airplane tickets and hotel bookings. Lower-earning groups spent about 10% more on travel lodging than normal.
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