US consumers fail to splash out

Shoppers in New York have had to make do without underground trains

US consumer spending rose by less than expected last month, reflecting the mixed holiday season picture for retailers, official data has shown.

The overall spending figure was up 0.3% in November, lower than the 0.4% rise predicted by analysts.

Excluding volatile food and energy costs, the core price index for consumer spending was up just 0.1%.

Inflation excluding food and energy rose only 1.8% in the year to November, the best performance since March 2004.

The overall inflation rate was up 2.7%.

Meanwhile, US personal incomes rose by 0.3% last month, in line with expectations.

Interest rates

Analysts broadly welcomed the latest figures from the US Commerce Department.

"Spending was up, a little weaker than expected... Nevertheless, the trend has been upward and it looks like the consumer is still in the ballgame in terms of supporting economic growth," said Patrick Fearon, senior economist at AG Edwards & Sons.

The US Federal Reserve raised interest rates by 0.25% to 4.25% earlier this month, the 13th consecutive rise.

Analysts continue to expect a further 0.25% rise when the Fed votes again in the New Year.

US retailers have revealed a patchy festive performance so far, with many expected to start their sales before the end of the year.

Shops in New York City have been further hampered by a continuing public transport strike.

A separate report by the US Department of Labor on Thursday showed that claims for unemployment insurance benefit were down 13,000 to 318,000 in the week ending 17 December, a bigger drop than economists had predicted.