The Commerce Department said consumer spending rose 0.4% last month. Data for May was revised up to show consumer spending advancing 0.5% instead of the previously reported 0.2% gain.

Last month's increase in consumer spending was in line with market expectations. The data was included in last Friday's second-quarter gross domestic product report, which showed consumer spending accelerating at a 4.0% annualized rate during that period after a pedestrian 0.5% pace in the first quarter.

The economy grew at a 4.1% rate in the second quarter, almost double the January-March period's 2.2% pace and the strongest performance in nearly four years. June's increase in consumer spending sets it on a higher growth path heading into the third quarter.

Consumer spending last month was boosted by spending at restaurants and on accommodation. Spending on services accelerated 0.6% after rising 0.3% in May. Outlays on goods were unchanged after surging 0.9% in May.

Prices continued to steadily rise last month. The PCE price index excluding the volatile food and energy components gained 0.1% in June. It had risen by 0.2% in the prior month.

That kept the year-on-year increase in the so-called core PCE price index at 1.9% for a third straight month.

The core PCE index is the Fed's preferred inflation measure. The core PCE hit the U.S. central bank's 2% inflation target in March for the first time since December 2011.

In a separate report on Tuesday, the Labor Department said its Employment Cost Index, the broadest measure of labor costs, rose 0.6% after an unrevised 0.8% advance in the first quarter. That pushed the annual increase in the ECI to 2.8%, the biggest gain since the third quarter of 2008, from 2.7% in the first quarter.

Wages and salaries, which account for 70% of employment costs, rose 0.5% in the second quarter, retreating from a 0.9% surge in the January-March period. Wages and salaries were up 2.8% in the 12 months through June, also the biggest annual gain since the third quarter of 2008.

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