Awwal 25, 1432 / April 29, 2011, SPA -- Growth in the U.S. economy slowed sharply to a 1.8 percent pace in the winter quarter from 3.1 percent at the end of last year as budget cuts at all levels of government and a surge in oil prices weighed on the economy, the Commerce Department reported Thursday. The jump in oil prices to more than $100 a barrel, and soaring prices for corn, wheat and other commodities, caused a near doubling of the inflation rate to 3.8 percent from 2.1 percent in the fourth quarter of 2010. That meant that consumers had less spending power, causing their contribution to economic growth to decline to 2.7 percent from 4 percent. "Sharply higher gasoline and food prices are taking a toll on growth," said Sam Bullard, a senior economist at Wells Fargo Securities. He said that caused consumers to backpedal after they fueled robust spending growth at the end of last year. "Retail gasoline prices have risen roughly 85 cents since the start of the year, while food prices were up an annualized 7.5 percent" during the quarter, he said. Still, "consumer spending held up reasonably well despite those challenges."
