WASHINGTON—Consumer spending rose for the fourth straight month in July, a sign domestic consumption could continue to drive U.S. economic growth over the second half of the year.

Personal consumption, which measures how much Americans spent on everything from hotel stays to hamburgers, rose a seasonally adjusted 0.3% in July from a month earlier, the Commerce Department said on Monday. Incomes rose 0.4%, a pick-up from growth in the prior two months.

Economists surveyed by The Wall Street Journal had expected personal spending to rise 0.3% in July. Income was projected to increase 0.4%.

Consumer spending had climbed 0.5% in June, 0.3% in May and 1.1% in April. Each of those gains matched or outpaced the month's income growth, suggesting consumers felt comfortable splashing out a little following two straight quarters in which the personal saving rate was 6% or higher.

Consumers upped their savings in July, as the personal saving rate rose to 5.7%, from an upwardly revised 5.5% in June.

Household spending accounts for more than two-thirds of economic output in the U.S. and has been a mainstay of the expansion, especially in recent quarters as business investment has faltered. Consumer expenditures were a bright spot for the economy during the second quarter, advancing at the fastest rate since late 2014. The gain offset weaker business and government spending.

A revised estimate of gross domestic product showed the overall economy grew at a lackluster 1.1% annual pace in the second quarter, the Commerce Department said Friday.

Meanwhile, Monday's report showed scant signs of inflation pressures in the economy.

The personal consumption expenditures price index, the Federal Reserve's preferred inflation measure, was flat in July from the prior month. From a year earlier, the index was up 0.8%, its smallest annual increase since March.

Inflation hasn't hit the Fed's 2% target for more than four years, and in the past two years has been held down largely by low gasoline and oil prices as well as cheaper imports. A firming of energy prices modestly pushed up the inflation reading earlier this year.

So-called core prices, which exclude the volatile categories of food and energy, rose 0.1% from the prior month and were up 1.6% from a year earlier. The annual core reading has been consistent since March.

Fed officials are watching key metrics such as inflation and hiring as they weigh another move on the central bank's benchmark interest rate. Fed Chairwoman Janet Yellen signaled growing conviction in remarks to a gathering of central bankers Friday that the central bank will raise interest rates in the coming weeks or months. Fed officials will hold a policy meeting Sept. 20-21.

When adjusting for inflation, Monday's report showed consumer spending rose 0.3% in July from the prior month. Inflation-adjusted disposable personal income—income after taxes—rose 0.4%.

Write to Anna Louie Sussman at anna.sussman@wsj.com and Ben Leubsdorf at ben.leubsdorf@wsj.com

(END) Dow Jones Newswires

August 29, 2016 09:15 ET (13:15 GMT)