WASHINGTON – Personal income rose 0.3% in February while consumption increased 0.7% in February, above economists’ estimates and the largest increase in four months, as energy costs increased, the Commerce Department reported Monday.
Core PCE, which excludes food and energy costs and is the Federal Reserve’s preferred measure of inflation, increased 0.9% for the 12 months ending in February, following an 0.8% increase for the year ended in January. Energy goods and services gained 11.0% over the 12-month period.
Energy consumption costs have accelerated over the past few months. In February, energy goods and services increased 3.5% from January.
Total consumption for February was revised higher to a 0.3% increase from 0.2% reported last month.
January income rose an upwardly-revised 1.2%. The jump in January incomes was partly attributed to the extension of the Bush-era tax cuts. The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 decreased the social security contribution rate for employees by 2.0 percentage points for 2011, or $105.4 billion in January.
Economists expected consumption would increase 0.6% in February and incomes would gain 0.4%, according to the median estimate from Thomson Reuters.
Consumption of durable goods jumped 17.7% at a seasonally adjusted annual rate in February.
The personal savings rate, disposable personal income minus consumption, dropped to $676.7 billion from $710.5 billion in January.
