WASHINGTON – Consumers boosted spending in December at the fastest pace in three months, giving the economy some momentum going into 2017.

Consumer spending advanced 0.5 per cent in December, a major improvement over the modest 0.2 per cent gain in November, the Commerce Department reported Monday. It was the best showing since spending jumped 0.7 per cent in September. The increase was driven by a 1.4 per cent surge in spending on durable goods, long-lasting items such as autos.

Incomes also showed some improvement, rising by 0.3 per cent in December, spurred by a rebound in growth in wages and salaries.

Consumer spending is closely watched since it accounts for 70 per cent of economic activity. Overall growth had slowed to a weaker-than-expected 1.9 per cent gain in the October-December quarter because of a slump in exports. But economists are looking for a rebound in the current quarter.

A key measure of inflation closely watched by the Federal Reserve edged up 0.2 per cent in December and over the past 12 months has risen 1.6 per cent. That is the largest 12-month gain in more than two years. But it is still below the Fed’s target of 2 per cent annual increases in inflation.

The central bank last month boosted its key interest rate by a quarter-point to a still-low range of 0.5 per cent to 0.75 per cent but projected that it could raise rates by three times this year as inflation rises further.

The 0.3 per cent rise in incomes reflected a 0.4 per cent gain in the key category of wages and salaries. Wages and salaries had actually fallen 0.1 per cent in November.

With spending outpacing income growth in December, the saving rate dropped to 5.4 per cent of after-tax incomes, down from 5.6 per cent in November. It was the lowest saving rate since March 2015.

Economists believe that consumer spending will show solid gains in 2017, reflecting strong labour markets with unemployment down to near a nine-year low of 4.7 per cent in December.