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Washington - US consumers tightened their wallets in January after the holiday shopping season despite a sharp rise in incomes, official data showed on Monday.
The Commerce Department reported consumer spending edged up a seasonally adjusted 0.2% in January, the weakest pace since June.
Adjusted for annual inflation at 0.3%, consumer spending - which accounts for about two-thirds of US economic output - fell for the first time in a year, by 0.1%.
Spending in December, when retailers offered steep discounts to lure holiday shoppers, was not as strong as first thought. That increase was revised downward to 0.5% from 0.7%.
Although the January slowdown in spending was in line with expectations as winter snowstorms gripped large parts of the country, it came as consumers found their incomes surged 1% - the sharpest gain since May 2009 - more than double the December rise.
"Incomes were boosted by the extension of unemployment benefits agreed by Congress in December, while wage and salary incomes, depressed by the severe weather, rose only 0.3%," said Ian Shepherdson at High Frequency Economics.
With persistently high unemployment weighing on consumers' wallets, inflationary pressures remained tame as businesses were reluctant to raise prices.
The consumer spending price index rose for the second straight month by 0.3% in January.
The core price index, excluding food and energy, edged up 0.1%.
As consumers hunkered down amid storms and braced against job losses and falling home values, they piled up their savings, pushing the personal savings rate up to 5.8%, its highest level since September.
