WASHINGTON (Reuters) - U.S. consumer spending rose modestly in May and inflation cooled, pointing to a slow-but-steady economic expansion that could still lead the Federal Reserve to raise interest rates by the end of the year.

A customer exits after shopping at a Macy's store in the Brooklyn borough of New York, U.S., May 11, 2017. REUTERS/Brendan McDermid

The data, released by the Commerce Department on Friday, bolstered the view that the U.S. economy is rebounding in the second quarter, although a separate report showed a gauge of consumer confidence fell in June to its lowest level since November.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.1 percent last month, according to the Commerce Department. Consumer prices excluding food and energy rose 1.4 percent on a yearly basis, compared to a 1.5 percent gain in April.

Yields on U.S. government debt rose and U.S. stock prices rose after the spending data was published. The dollar .DXY was little changed against a basket of currencies.

Some Fed policymakers are worried that inflation may fall further below the central bank’s 2 percent target, but Fed Chair Janet Yellen said earlier this month that inflation would likely be soft in the coming months due to temporary factors.

Solid consumer spending is supporting the outlook for faster inflation and continued economic growth. The slower spending growth in May followed two monthly increases of 0.4 percent, which suggests economic growth is on track to accelerate in the second quarter after a meager expansion in the first three months of the year.

“It still looks like real consumption picked up lately,” said Daniel Silver, an economist at JPMorgan in New York.

The personal consumption expenditures (PCE) price index fell 0.1 percent in May from April, dragged lower by drops in prices for consumer goods and energy. When food and energy were excluded, the index was up 0.1 percent.

The 12-month reading for the so-called core inflation has been slowing since March.

The slowdown in inflation has boosted consumer spending power. After-tax personal income adjusted for inflation rose 0.6 percent in May, the largest gain since April 2015.

Even so, the University of Michigan’s consumer sentiment index fell to 95.1 this month, its lowest since November, according to a final reading for the gauge published on Friday. The index has been rising more or less steadily since 2008 and in November it hit its highest level since before the 2007-09 recession.