US personal spending rises 1.1%

US personal spending jumped a bigger-than-expected 1.1 per cent for November in the sharpest rise in over two years, a Commerce Department report showed today.

The personal consumption expenditure price index, a key measure of inflation, rose 0.6 per cent, the biggest gain since September 2005. Core PCE prices, which strip out food and energy costs, rose at a 0.2 per cent rate, matching expectations.

The year-on-year core PCE, a favourite inflation gauge of the Federal Reserve, climbed to 2.2 per cent, the highest since March. The overall PCE index rose 3.6 per cent from a year earlier, the steepest 12-month climb since October 2005.

Real spending, which adjusts for inflation, rose 0.5 per cent in November, the highest since December 2006.

Prices for US government bonds fell as the report showed inflation flaring above the 2 per cent rate that is at the top of the Fed's ideal range.

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