Americans were hesitant to open their wallets last month despite swelling incomes, with spending growth slowing in a sign of the economy’s weak start to the year.
Consumer spending rose just 0.1 percent in March, down from an upwardly revised 0.2 percent increase the previous month, the Commerce Department said Friday. The latest figure was below economists’ forecasts.
But personal income increased more than expected. Incomes rose 0.4 percent last month, up from a downwardly revised 0.1 percent gain in February.
Consumers opted to save more of their higher income instead of spend it amid concerns about the economy.
The percentage of disposable income saved increased to 5.4 percent last month, the highest rate in more than a year.
Consumer spending accounts for about two-thirds of American economic activity, and the March data are in line with Thursday’s government report of weak 0.5 percent economic growth in the first three months of the year.
But the labor market has continued to strengthen. That’s reflected in solid income growth so far this year.
The additional money goes further because of low inflation, which has been caused by falling oil prices.
But inflation increased last month. A key price index also released Friday rose 0.1 percent after a 0.1 percent drop in February.
Still, prices increased just 0.8 percent during the 12 months ended March 31, well below the Federal Reserve’s 2 percent annual target. Excluding volatile energy and food prices, prices increased 1.6 percent for the same period.
Low inflation combined with weak economic growth has led Fed policymakers to delay increasing a key short-term interest rate.
Fed officials held the rate steady at between 0.25 percent and 0.5 percent after their latest policymaking meeting on Wednesday.