Personal income in the U.S. increased in line with economist estimates in the month of February, according to a report released by the Commerce Department on Thursday.
The report showed personal income rose by 0.5 percent in February after inching up by a revised 0.1 percent in January.
Economists had expected personal income to climb by 0.5 percent compared to the unchanged reading originally reported for the previous month.
The personal income growth came as an increase in compensation more than offset a decrease in government social benefits.
Disposable personal income, or personal income less personal current taxes, rose by 0.4 percent in February after ticking up by 0.1 percent in January.
Excluding price changes, however, real disposable income dipped by 0.2 percent in February after falling by 0.4 percent in January.
“Inflation continues to erode households’ purchasing power as real disposable income fell for a seventh straight month,” said Lydia Boussour, Lead U.S. Economist at Oxford Economics.
Meanwhile, the Commerce Department said personal spending edged up by 0.2 percent in February after surging by an upwardly revised 2.7 percent in January.
Personal spending was expected to increase by 0.5 percent compared to the 2.1 percent jump originally reported for the previous month.
The report showed real personal spending, which excludes price changes, fell by 0.4 percent in February after shooting up by 2.1 percent in January.
With income rising by more than spending, personal saving as a percentage of disposable income increased to 6.3 percent in February from 6.1 percent in January.
A reading on inflation said to be preferred by the Federal Reserve showed the annual rate of core consumer price growth accelerated to 5.4 percent in February from 5.2 percent in January.
“U.S. consumers will face hard choices in the coming months as surging prices of non-discretionary items such as food, energy, and shelter pressure their budgets and lead them to pare back some purchases and dip into their savings,” Boussour said.
She added, “But robust labor income growth, record levels of household wealth, and ample excess savings worth 13% of GDP mean that consumer spending should remain well supported.”