Consumer spending takes hit despite stimulus checks

5 August 2008

US consumer spending fell by 0.2 per cent in June, the Commerce Department has said.

Higher gasoline prices at the pump also helped consumer-related inflation to increase by 0.8 per cent across the month - the biggest single rise since 1981.

The new figures suggest that many Americans are struggling from the effects of rising costs, and might have worked through their stimulus checks already.

According to the Commerce Department, increased costs were not matched by incomes, which rose by just 0.1 per cent across the month.

The total doled out in stimulus checks hit $27.9 billion in June, down from $48.1 billion in May.

As the markets responded to the news, the Dow Jones industrial average fell by 0.71 per cent to 11,245.55, the Associated Press reports.

The US Federal Reserve meets to set the base rate of interest today, with the latest inflation statistics appearing to head off the likelihood of a further cut being announced by the central bank.

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