January personal income up 1.0%; spending up 0.2% (by Jeffry Bartash)

WASHINGTON (MarketWatch) - Personal income of American workers jumped a seasonally adjusted 1.0% in the first month of 2011, marking the biggest increase in a year and a half, while consumer spending rose a smaller 0.2%, the Commerce Department reported Monday. The increase in income stemmed largely from a one-year reduction in worker contributions to Social Security that took effect in January. A key inflation indicator, the personal consumption expenditure price index, rose 0.3% in January. The core PCE, which excludes volatile food and energy costs, rose 0.1%. Over the past year, core inflation has risen 0.8%. Economists surveyed by MarketWatch had forecast a 0.9% gain in personal income and a 0.4% increase in consumer spending. The core PCE index was expected to rise 0.1%. The government also revised consumer spending in December to a 0.5% increase.