U.S. consumers increased their spending at the start of the year even as income growth dipped, while a key indicator of inflation held steady at a spot above the U.S. Federal Reserve’s comfort zone.

Personal consumption climbed in January by 0.4% compared to the month before, the U.S. Commerce Department said today.

December spending rose an upwardly revised 0.3%.

Consumer spending makes up about 70% of U.S. GDP and, therefore, is a big engine of the economy. But adjusted for inflation, consumer spending in January was unchanged.

Today’s data revealed a price index for personal consumption expenditures rose 0.4% in January compared to the prior month. The PCE price index excluding food and energy, or core PCE, rose 0.3%.

Compared with a year earlier, the PCE price index climbed 3.7% in January. The year-over-year climb in December was 3.6%.

The PCE price index excluding food and energy, year over year, climbed 2.2% in January. The gauge also rose 2.2% in December. The Fed watches the year-over-year PCE price index excluding food and energy closely for signs of problematic inflation. The central bank’s preferred range for this core gauge is considered to be 1.0% to 2.0%.

The report also showed personal income increased at a seasonally adjusted rate of 0.3% compared to the month before. Income rose an unrevised 0.5% in December.

Economists had forecast a 0.2% increase in personal income during January and a 0.2% rise in consumer spending.