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US consumers spend more in August US consumers spend more in August
(about 1 hour later)
US consumer spending rose in August as Americans shrugged off credit and housing woes, official data from the US Commerce Department showed.US consumer spending rose in August as Americans shrugged off credit and housing woes, official data from the US Commerce Department showed.
It reported that spending rose 0.6% in August, the strongest gain in four months and up from a 0.4% rise in July.It reported that spending rose 0.6% in August, the strongest gain in four months and up from a 0.4% rise in July.
Meanwhile core consumer prices, which exclude food and energy costs, rose by 0.1% for a sixth consecutive month.Meanwhile core consumer prices, which exclude food and energy costs, rose by 0.1% for a sixth consecutive month.
And the annual year-on-year price increase of 1.8% was the smallest rise since a matching gain in February 2004.And the annual year-on-year price increase of 1.8% was the smallest rise since a matching gain in February 2004.
The strength in consumer spending should bolster confidence in the health of the US economy, after some analysts have predicted that recent mortgage market turmoil could trigger a slowdown.The strength in consumer spending should bolster confidence in the health of the US economy, after some analysts have predicted that recent mortgage market turmoil could trigger a slowdown.
The dollar fell to another record low against the euro as the tame inflation data raised the prospect of more cuts in US interest rates. Construction spending in the US also showed surprising strength. The Commerce Department reported a bigger-than-expected 0.2% gain for August, despite a slump in house building.
The euro reached 1.4208 dollars in afternoon London trade, its highest level since creation of the European single currency. A 2.3% increase in investment in office building, shopping centres and other non-residential developments - the biggest monthly rise in six months - helped to offset the downturn in the housing market.
Further rate cuts?
The lower inflation figure boosted the prospect of further cuts in US interest rates, pushing the dollar to another record low against the euro.
The euro reached 1.4208 dollars in afternoon London trade, its highest level since the creation of the European single currency.
The US Federal Reserve cut the cost of borrowing by half a percentage point last week, and many experts think it will have to lower them further to make sure housing and credit problems do not result in a recession.The US Federal Reserve cut the cost of borrowing by half a percentage point last week, and many experts think it will have to lower them further to make sure housing and credit problems do not result in a recession.