US Aug real consumer spending falls as core inflation surges to decade high

Real consumer spending dropped for the first time since the aftermath of Hurricane Katrina last year as core inflation rose to its highest level in more than a decade, the Commerce Department said Friday. Adjusted for inflation, real consumer spending fell 0.1 pct in August, the first decline since a 0.3 pct drop in September 2005. Unadjusted consumer spending rose 0.1 pct in August, slower than the 0.8 pct gain in July and slightly slower than the 0.2 pct gain economists had expected. Income rose 0.3 pct in August after increasing by 0.5 pct in the prior month, in line with expectations. Real disposable incomes, which are inflation-adjusted and measure income after taxes, rose 0.2 pct in the month. They rose 0.3 pct in July. Core inflation, as measured by the personal consumption expenditure price index, excluding food and energy, rose 0.2 pct in August. Core inflation has risen 2.5 pct in the past 12 months, matching the gain of April 1995. The gain was last exceeded in January 1995.