US consumer spending fell in December in the midst of the key year-end holiday shopping season, while their incomes continued to grow, Commerce Department data released Monday showed.
Consumer spending, which accounts for about 70 percent of the economy`s activity, fell 0.3 percent from November, the first decline of the year. The last time it fell was in December 2013.
The decline came after a sharp 0.5 percent rise in November, a month marked by aggressive price cuts and sales promotions ahead of the year-end holiday shopping season.
Personal income, as well as disposable personal income, rose 0.3 percent for the second straight month in December. Wages and salaries, the largest part of income, edged up only 0.1 percent in December after a 0.6 percent rise in November.
For all of 2014, consumer spending grew 3.9 percent, picking up from the 3.6 percent pace the prior year.
Personal income rose 3.9 percent last year from a 2.0 percent gain in 2013.
"Looking ahead, further big real income gains and soaring confidence point to serious strength in spending," said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a research note.
"We would not be surprised to see gains approaching 5 percent annualized in the spring."
As income rose in December, Americans socked more away, pushing the personal saving rate up to 4.9 percent from 4.3 percent in November.
Meanwhile prices declined, helped by sinking energy prices. The price index for personal consumption expenditures fell 0.2 percent. Core PCE prices, stripping away food and energy, were flat.
Year-over-year, PCE prices rose 0.7 percent and the core PCE price index, the Federal Reserve`s preferred inflation measure, increased 1.3 percent, well below the Fed`s 2.0 percent target.
