U.S. consumer spending rose solidly in December as households bought motor vehicles and a range of services amid rising wages, pointing to sustained domestic demand that is likely to set the economy up for faster growth in early 2017.

The Commerce Department said on Monday that consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.5 percent after an unrevised 0.2 percent gain in November.

Economists polled by Reuters had forecast consumer spending climbing 0.5 percent last month. Consumer spending increased 3.8 percent in 2016 after rising 3.5 percent in 2015.

When adjusted for inflation, consumer spending increased 0.3 percent last month after rising 0.2 percent in November.

The data was included in the fourth-quarter gross domestic product report published on Friday. The economy grew at a 1.9 percent annual rate in the fourth quarter, restrained by a wider trade deficit.

Private domestic demand, however, increased at a solid 2.8 percent rate. The economy grew at a 3.5 percent rate in the third quarter.

With domestic demand rising, inflation showed some signs of picking up last month. The personal consumption expenditures (PCE) price index rose 0.2 percent after edging up 0.1 percent in November.

In the 12 months through December the PCE price index rose 1.6 percent, the biggest increase since September 2014. That followed a 1.4 percent increase in November.