Fuel prices lift US consumer spending US consumer spending rose by the most in six months as higher prices at petrol pumps took their toll. At the same time, people were more upbeat about economic prospects. Spending rose 0.5 per cent in August, in line with forecasts, following a 0.4 per cent gain in July, according to the commerce department. Most of the increase was due to higher prices, particularly petrol. The average cost of a gallon of fuel rose 30.8 cents over the month to $3.829 a gallon on August 31, according to the American Automobile Association. Inflation rose 0.4 per cent over the month, the largest gain since March 2011. Year on year it climbed 1.5 per cent. Core inflation - stripping out food and energy costs - was up just 0.1 per cent from July to August. When adjusted for inflation, total spending was up 0.1 per cent in August. Disposable incomes increased a modest 0.1 per cent - the same as July - but adjusted for inflation, incomes fell 0.3 per cent over the month after rising 0.1 per cent in July. The faster pace of spending growth compared with incomes trimmed the savings rate to 3.7 per cent in August from 4.1 per cent the month before. Consumer spending accounts for about 70 per cent of the US economy and analysts say the tepid pace in August is unlikely to boost growth in the third quarter. Figures on Thursday showed the US economy expanded at an annualised rate of just 1.3 per cent in the second quarter, down from an earlier estimate of 1.7 per cent. Slower consumer spending and the severe drought weighed on growth. "The [data] are worse than the headline figures suggest and indicate that subdued jobs growth is hitting incomes," said Paul Dales, senior US economist at Capital Economics. With the saving rate having fallen back . . . it's not as though households can fund extra spending by dipping into their savings. Also on Friday, the Thomson Reuters/University of Michigan consumer sentiment survey showed Americans were less pessimistic in September about job prospects and economic growth. The sentiment index rose from 74.3 in August to 78.3 this month, the strongest reading since May. That was below forecasts of 79, however, and weaker than an initial reading this month of 79.2. The measure of expectations for the next six months rose from 65.1 to 73.5. As for the unemployment rate, more consumers said they expected a decline rather than those who predicted a rise. More people think the economy will expand rather than contract. However, consumers were more cautious in their assessment of current conditions. That index fell to 85.7 from 88.7 as fewer respondents said their financial situations had improved in September.