US inflation continued to dip in June as spending on fuel decreased due to falling oil prices, while a drop in personal income accounted for lower household spending.
The US Department of Commerce's figures on personal consumption expenditure (PCE) showed lower levels of disposable income depressed consumption growth.
June's PCE price index rose at 1.4%, down from 1.5% in May, but beat expectations of a fall to 1.3%. The figure for May was revised up from 1.4%.
Core PCE, which excludes energy and food prices, rose by an annual 1.5% in June, matching May's number.
While overall consumer spending rose 0.1% on increased demand for services in June, declining spend on durable and non-durable goods had the biggest negative impact.
Spending on fuel, particularly gasoline, was the biggest contributing factor behind the decline in goods as oil prices remained below $50 a barrel.
PCE is the measure of inflation used by the Federal Reserve when it assesses the impact of price stability on economic growth at its monetary policy meetings.
At 1.4%, the rate of inflation as measured by the PCE index remained well below the Fed's target rate of 2% that it believes is consistent with long-term trend growth.