WASHINGTON (Reuters) – U.S. consumer spending rebounded strongly in January amid rising incomes, while inflation accelerated, which could bolster fears in financial markets that the Federal Reserve will continue to hike. its interest rates during the summer.

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Consumer spending, which accounts for more than two-thirds of U.S. economic activity, jumped 1.8% last month, the Commerce Department said on Friday.

December data was revised to -0.1% from -0.2% previously.

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Economists polled by Reuters had forecast a rebound in consumer spending of 1.3%.

Spending was likely boosted by an 8.7% cost-of-living adjustment, the biggest increase since 1981, for more than 65 million Social Security recipients, which boosted incomes.

This strong performance puts consumer spending on a higher growth trajectory at the start of the first quarter. Consumer spending slowed in the fourth quarter, with most of the loss of momentum occurring in the last two months of 2022.

The personal consumption expenditure (PCE) price index rose 0.6% last month after rising 0.2% in December. In the 12 months to January, the personal consumption expenditure price index rose 5.4% after rising 5.3% in December.

Excluding the volatile components of food and energy, the PCE price index rose 0.6% after rising 0.4% in December. The core PCE price index rose 4.7% year-on-year in January, after rising 4.6% in December.

(Report Lucia Mutikani, Augustin Turpin, edited by Kate Entringer)

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