Consumers unexpectedly cut back on spending two months before the first sales tax increase since 1997, in a potential sign that emerging inflationary pressures are undermining purchasing power.
Household spending fell 2.5 percent in February from a year earlier, the first drop in six months, the government said Friday, compared with a median estimate of economists for a 0.1 percent rise.
Retail sales slowed, while a measure of inflation that strips out energy and fresh food increased the most since 1998.