WASHINGTON (Reuters] – U.S. consumer spend increased in September. However, it was partly dampened by higher prices. This is because inflation remained hot amid global shortages of vehicles and other goods.

According to the Commerce Department, consumer spending, which is responsible for over two-thirds U.S. economy activity, increased 0.6% in August. The August data was updated to reflect a 1.0% increase in spending, instead of 0.8% previously reported.

Reuters polled economists and found that 0.5% of them expected consumer spending to rise. The Delta variant’s resurgence of COVID-19 case numbers over the summer has led to a worsening in worker shortages at ports and factories. This further stresses supply chain relationships.

Except for the spring 2020 shutdown, which had a severe impact on output, the third quarter saw the lowest motor vehicle production levels since 2009, due to a worldwide shortage of semiconductors. The auto inventories are low and many shelves are empty, which has slowed spending and raised prices.

In September, price pressures were still strong and drained consumers’ purchasing power.

After gaining 0.3% last August, the personal consumption expenditures price index (PCE), rose 0.2%. The core PCE index, also known as the price index for personal consumption expenditures (PCE), increased 3.6% in the 12-months to September after an identical gain in August.

For its flexible goal of 2%, the Federal Reserve prefers to use the core PCE index as an inflation measure. At next week’s Fed policy meeting, it is likely to announce that the Fed will begin reducing its monthly bond purchase program.

On Thursday, the Advance Gross Domestic Product Report for the Third Quarter published the consumer spending and inflation data. After double-digit growth in the two previous quarters, consumer spending fell to 1.6% annually. Outlays for long-lasting goods such as motor vehicles collapsed at 26.2%.

This slowed economic growth to 2.0%, which is the lowest rate since 2020’s second quarter, when it suffered an historic contraction due to the strict mandatory measures taken to stop the first COVID-19 outbreak.