NEW YORK (CNN/Money) - The growth in consumer spending picked up steam in May, according to a government report, as spending levels came in stronger than Wall Street expectations.
The Commerce Department report showed spending by individuals gained 1 percent in May, up from a revised 0.2 percent gain in April. Economists surveyed by Briefing.com forecast a rise of 0.8 percent.
The increase was the greatest in 2 1/2 years, but an increase in prices accounted for more than half. Without the increase in prices, spending posted only a 0.4 percent increase. The report showed that the price index for expenditures, excluding food and energy items, increased 1.6 percent in May compared to a year earlier, the same as the revised reading on inflation for April.
The same report showed personal income at 0.6 percent in May, unchanged from the rise posted in April. Economists surveyed by Briefing.com forecast a 0.5 percent rise.
The report comes in advance of the Federal Reserve's two-day meeting, which begins Tuesday. The central bank is expected to announce its first hike in interest rates in four years Wednesday as it attempts to combat renewed inflationary pressures in the economy.
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