US shoppers spending not saving

Many US shoppers are spending more than they earn

US consumers dipped into their savings to fund a January shopping spree that saw retail spending rise nearly 1%.

A Commerce Department report showed that personal incomes grew 0.7% for the month, but consumers spent even faster.

The spending increase was the largest since last July, and it meant Americans tapped their savings to go shopping for the third month in a row.

The personal savings rate - the proportion of money people save - has not been above zero since March 2005.

Inflation also rose in January. The report said prices rose 0.2% after volatile energy and food costs were excluded.

The Federal Reserve has raised interest rates 14 times since June 2004 and is expected to push them up again later this month, in a bid to keep a tight lid on inflation.