(Bloomberg) -- U.S. personal spending growth moderated in July, reflecting a slowdown in outlays for merchandise, while a closely watched measure of inflation remained elevated. 

Purchases of goods and services rose 0.3% following a revised 1.1% increase in June, Commerce Department figures showed Friday. The personal consumption expenditures price gauge, which the Federal Reserve uses for its inflation target, climbed 0.4% from a month earlier and 4.2% from a year ago.

The median estimates in a Bloomberg survey of economists called for 0.4% increases in both outlays and the price index from a month earlier. 

After adjusting for the change in prices, household demand was more muted, suggesting a softer start to third quarter household outlays, a key component of gross domestic product. Real personal spending fell 0.1% in July. 

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