Americans' wallets burst open in May, producing the biggest spending gain in nearly six years after another strong month of income growth.
Consumer spending jumped 0.9% last month, a sharp increase from an upwardly revised 0.1% increase in April, the Commerce Department said Thursday.
The May increase was the biggest since August 2009.
Personal income rose 0.5% in May for the second straight month. But instead of saving much of that money as they did in April, consumers spent it.
The portion of disposable income saved dropped to 5.1% from 5.4% in April.
Economists had expected spending to rebound last month after a weak April, but the increase surpassed the average forecast of a 0.7% gain.
Income growth was slightly better than the 0.4% forecast.
The annual inflation rate held steady in May at 0.2%, well below the Federal Reserve's target of 2%.
Central bank policymakers want to see signs inflation is moving toward that level before raising their key short-term interest rate for the first time since 2006. Many economists expect a rate hike in September.
Since last year, inflation has been held down by lower oil prices. However, oil prices have been rising in recent weeks.
Excluding volatile energy and food prices, the so-called core inflation rate was 1.2% for the 12 months ended May 31. That was down slightly from 1.3% in April.
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