Consumer purchases climbed in January by the most in eight months, fueled by faster earnings growth that’s being accompanied by rising inflation.
The 0.5 percent advance followed a 0.1 percent gain the prior month, a Commerce Department report showed Friday. The January figure exceeded the 0.3 percent median forecast in a Bloomberg survey. Incomes also climbed 0.5 percent, more than projected.
Steady hiring, cheap gasoline, and rising home values are powering Americans’ ability to boost spending, which accounts for almost 70 percent of the economy. The report also showed the Federal Reserve’s preferred measure of inflation rose by the most since October 2014, illustrating the challenge for U.S. central bankers as they consider tighter monetary policy amid feeble global markets.