Private spending rose 1.3% last month, a sign that consumers continue to spend more despite higher inflation, which continues to rise at the rate it has been for three decades, according to new data from the Commerce Department on Wednesday.
Prices rose 5% in the year through October, the fastest increase in over 30 years, according to the latest Personal Consumption Spending Price Index report.
Inflation is rising at the fastest pace in three decades, as data shows: The annual price jump in October is more than in the previous month, which showed a rise in prices of 4.4% for the year to September.
Despite the ongoing Covid-19 pandemic, cut in stimulus payments, and lingering supply chain problems that fuel investors’ inflation fears, consumer demand remains stable amid rising private wages, the Commerce Department report said.
Household final consumption expenditure (or PCE) – a key figure for consumer spending – rose 1.3% in October, while personal income rose 0.5%, according to the data.
Both measures of consumer strength have risen sharply over the past few months: the increased spending ahead of a busy Christmas season could help fuel the general economic recovery, experts say.
The increase in personal spending, according to the report, is due to Americans benefiting from big wage increases and healthy household balances, especially after several rounds of government incentives.