US consumer income, spending up solidly in August

US consumer spending grew solidly in August despite stock market turbulence which some worried would spook shoppers, while prices remained subdued, Commerce Department data showed Monday.

Income growth was firm, suggesting a steady rise in wages that would support much-awaited policy tightening by the Federal Reserve.

Personal consumption expenditures (PCE) rose 0.4 percent in August, the same monthly gain as July, but year-over-year were up a modest 3.2 percent.

Incomes grew 0.3 percent in the month, compared to 0.5 percent in July, but disposable income was up 0.4 percent, holding the same pace since the beginning of the year.

Ian Shepherdson of Pantheon Macroeconomics said the new data added more evidence for US economic growth picking up strength.

"Robust real after-tax income growth is propelling spending," he said.

Inflation, though, was weak: the PCE price index, the key measure that the Fed watches to guide policy, was up just 0.3 percent from a year ago. And when volatile food and energy are stripped out, it was up 1.3 percent yea-on-year, well below the Fed's target rate of 2.0 percent.

The Federal Reserve has repeatedly said it wants to see more indications of tightening in the labor market -- including both rising wages and incomes -- and prices before it begins moving interest rates higher toward a more normal policy stance.