Consumers showed some increased financial discipline last month, taking home more pay but not spending all of it.
A report by the Bureau of Economic Analysis, part of the Commerce Department, shows incomes rose a healthy 0.4 percent in February. Consumer spending increased, but only by 0.2 percent.
Inflation increased in February, but not enough to cause concern. The Personal Consumption Expenditures Price (PCE) index, closely followed by the Federal Reserve as it tracks inflation, rose 0.2 percent during the month. Over the last 12 months, the rate rose slightly, but last month’s increase was the biggest in a year.
Consumers also saved more. The nation's savings rate went up for a second straight month to 3.4 percent, recovering after a consumer spending binge at the end of last year.
Analysts say the numbers suggest consumers are moderating their spending habits after running up huge credit card bills last year.
The Federal Reserve, under new chairman Jerome Powell, is keeping a close eye on inflation this year. The Fed's Open Market Committee hiked its discount rate a quarter point in mid-March, signaling it will do so again if prices begin to rise too quickly.