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Consumer spending shows biggest jump since ’09 after strong income gains

Shopper Julian Fojon-Losada of Georgia checks a coconut at a local fruit store in the Little Havana area of Miami on June 9.

Shopper Julian Fojon-Losada of Georgia checks a coconut at a local fruit store in the Little Havana area of Miami on June 9.

(Alan Diaz / Associated Press)
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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.

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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.

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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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