WASHINGTON (Reuters) - U.S. household income rose in March by the most in three months although consumers socked away part of the extra cash by saving more and only modestly increasing spending.
The Commerce Department said on Monday consumer income rose 0.4 percent last month. Analysts had expected a gain of 0.3 percent. After tax income climbed 0.2 percent in March when accounting for higher prices.
Consumer spending rose 0.3 percent last month, also just below the median forecast in a Reuters poll of 0.4 percent. When taking into account inflation, spending was up 0.1 percent.
U.S. economic growth cooled in the first quarter as businesses cut back on investment and restocked shelves at a slower pace.
Stronger consumer spending over the entire quarter cushioned the blow, but Monday's data suggested consumers ended the quarter spending less freely.
With consumption rising less quickly than income, the saving rate edged higher to 3.8 percent.
A price index for personal spending rose 0.2 percent in March. In the 12 months through March, the PCE index was up 2.1 percent, the lowest in a year but still just above the U.S. Federal Reserve's target of 2 percent.
(Reporting by Jason Lange; Editing by Andrea Ricci)