Friday 27 June 2014

Real consumer spending falls in US and Japan as inflation accelerates

After having been flat in April, US consumer spending rose just 0.2 percent in May, according to a report on Thursday. The increase in spending last month came below the expectations of economists for a 0.4 percent rise based on a Bloomberg survey.

Personal income did better though, rising 0.4 percent in May.

Inflation also accelerated. The personal consumption expenditure price index rose 0.2 percent in May from the prior month and was up 1.8 percent from a year earlier, the biggest 12-month increase since October 2012.

After adjusting for inflation, consumer spending fell 0.1 percent last month after falling 0.2 percent in April.

Data on Friday showed that Japanese consumer spending fared even worse in May.

As Japanese consumer prices excluding fresh food rose 3.4 percent year-on-year in May, the fastest pace in 32 years, household spending plunged 8.0 percent in May year-on-year.

Encouragingly for Japan, though, retail sales fell just 0.4 percent in May from the previous year, much better than the 4.3 percent fall in April, and the unemployment rate fell to 3.5 percent last month, the lowest level in nearly 17 years.

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