Inflationary pressures in the US were greater than previously thought in the first three months of the year, according to data which also showed that the economy grew at its slowest pace since 2003 over the period.

The raised spending figure makes it less likely that further data on core personal spending out on Friday will fall within Feds preferred range of 1 to 2 per cent growth. Economists have been predicting that the price measure rose 1.9 per cent in the year until May, but may now boost their forecasts. A figure rising above 2 per cent might strengthen the Feds resolve to keep inflation under control and hence reduce further the chance of rate cuts.