US consumers have barely opened their wallets wider in May despite rising income growth, the government says in a report providing evidence of weakness in the economy's key driver.
Consumer spending, which accounts for more than two-thirds of US economic growth, rose a mere 0.2 per cent in May, the Commerce Department said on Thursday.
There was no growth in April, with the number revised to an increase of less than 0.1 per cent, from a 0.1 per cent fall.
Real consumer spending, which strips out price changes, fell 0.1 per cent in May after declining 0.2 per cent in April.
Durable goods spending jumped 1.0 per cent after a 0.9 per cent fall in April. Spending on cars also rose.
The slump in spending came as personal income increased 0.4 per cent in May, accelerating from the prior month's 0.3 per cent gain.
Disposable personal income - income adjusted for taxes and inflation - rose 0.2 per cent for the second straight month.
Consumers were saving more, pushing the saving rate to 4.8 per cent from 4.5 per cent in April.
Inflation remained subdued. The personal consumption expenditures price index, the Federal Reserve's preferred measure, rose 0.2 per cent, the same as April.
Core PCE prices, stripping out more volatile food and energy prices, also rose 0.2 per cent.
On an annual basis, PCE prices were up 1.8 per cent, slightly below the Fed's 2.0 per cent inflation target.
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