Americans crimped their wallets last month as inflation heated up to historic levels.
The Commerce Department reported Friday that consumer spending, which accounts for more than two-thirds of economic activity - dropped 0.6% after gaining in November.
Behind that decline: Surging Omicron infections reduced traffic to restaurants and bars and other venues, and fear of shortages of goods at stores likely drove Americans to get a head-start to their holiday shopping instead of waiting until December.
Those shortages caused by snarled supply chains drove inflation higher last month. The personal consumption expenditures price index, which the Federal Reserve watches closely, climbed at a 5.8% annual clip --- the largest advance in four decades.
With inflation running way above the Fed’s target, the central bank signaled Wednesday it’s likely to raise interest rates in March.