A key metric that the Federal Reserve closely monitors indicates that inflation continues to rise at a searing rate, according government data published Friday.
With demand squeezed by inflationary, U.S. consumer spending on clothing and footwear fell for the second straight month in June, declining a seasonally adjusted 0.67 percent to $491.96 billion, the Bureau of Economic Analysis (BEA) reported Friday in its Personal Income and Outlays survey.
Spending on furnishings and durable household equipment, generally considered more of a priority of consumers’ disposable income, fared better, increasing 0.52 percent in June–the fourth straight monthly gain–to $487.29 billion.
The BEA data was generally consistent with the June retail sales report from the U.S. Census Bureau, which showed clothing and clothing accessory store sales were down 0.4 percent month over month seasonally adjusted, but up 0.2 percent unadjusted from the same month last year.
Similarly, furniture and home furnishings store sales were up 1.4 percent for the month and rose 4.8 percent from June 2021.
“Inflation has consumers modifying their spending behavior and prioritizing essentials like food, energy and back-to-school items,” Matthew Shay, president and CEO of the National Retail Federation, said when June retail sales were released earlier this month. “Unfortunately, modified consumer behavior won’t be sufficient to offset persistent price increases. Other policy measures like removing China tariffs, enacting smart immigration reforms and investing in supply chain resiliency are needed to lower costs for American families and put much-needed dollars back into their pockets.”
The BEA report revealed that overall personal consumption expenditures (PCE) rose 1.1 percent, or $181.1 billion, reflecting increases of $94.9 billion in spending for goods and $86.2 billion in spending for services. Within goods, gasoline and other energy goods was the leading contributor to the increase, while in services, the largest contributors were spending for health care and for housing and utilities.
The PCE price index rose 1 percent for the month. The core PCE price index, excluding food and energy, increased 0.6 percent, while real PCE, adjusted for inflation, was up 0.1 percent overall and in goods and services.
BEA said within goods, an increase in durable goods, led by motor vehicles and parts, was partly offset by a decrease in nondurable goods, led by food and beverages. Within services, increases in health care, food services and accommodations were the leading contributors.
From the same month a year ago, the PCE price index for June increased 6.8 percent, according to BEA. Prices for goods were up 10.4 percent and prices for services increased 4.9 percent. Food prices rose 11.2 percent and energy prices jumped 43.5 percent. The PCE core price index was up 4.8 percent year over year.
Disposable personal income (DPI), an important gauge for retail spending, increased 0.7 percent, or $120.4 billion, in June, while real DPI decreased 0.3 percent.
Personal income increased 0.6 percent, or $133.5 billion, in June. BEA attributed this to increases in compensation, led by private wages and salaries, and proprietors’ income.
Personal outlays rose $186.5 billion for the month. Personal saving was $944.5 billion in June and the personal saving rate–personal saving as a percentage of disposable personal income–was 5.1 percent.