A key gauge of core US consumer prices rose a moderate 0.2 per cent last month, but inflation-adjusted spending advanced just 0.1 per cent as energy prices pressured shoppers.
The increase in the core price index for consumer spending, which strips out volatile food and energy prices and is the Federal Reserve's favoured inflation gauge, kept the 12-month gain at the 2.1 per cent it hit in April, the US Commerce Department said.
The reading on core inflation matched economists' expectations and brought some relief to financial markets still uncertain about whether the Fed would continue to push interest rates higher.
The report showed nominal consumer spending increased 0.4 per cent in May, right on Wall Street forecasts and just enough to stay ahead of inflation.
In inflation-adjusted terms, however, the scant 0.1 per cent rise in spending marked a slowdown from the 0.2 per cent gain logged in April. Growth in personal income also slowed, rising 0.4 per cent last month, ahead of economists' forecasts for a 0.2 per cent rise but slowing from a 0.7 per cent April increase.
The rise in income reflected gains stemming from interest earnings and an increase in the income of partnerships and business owners. Wages and salaries, which shot up a steep 0.8 per cent in April, were flat.
In order to keep up their spending in the face of high energy prices, consumers dug deeper into their savings. The personal saving rate - saving as a percentage of disposable income - slipped to a negative 1.7 per cent, the lowest since a hurricane-related record low in August.
Economists said consumers eventually would capitulate and cut their spending.