WASHINGTON (Reuters) –

U.S. consumer credit expanded at the

fastest rate in seven months in June as Americans turned to

credit cards and consumer loans to maintain spending in the

face of rising food and energy costs, a government report on

Thursday showed.

June consumer credit rose $14.33 billion, or at a 6.7

percent annual rate, to $2.586 trillion, the Federal Reserve

said. Analysts polled by Reuters were expecting a $6 billion

rise.

May was revised to a $8.05 billion increase from an

originally reported $7.78 billion rise.

Consumers fuel two-thirds of national economic activity

through their purchases of goods and services, so analysts

closely monitor their credit habits for indications about the

underlying strength of consumer demand.

However, economists say that consumers are not feeling good

about the economy right now as they are being pinched by high

energy prices and could be putting more gasoline costs on to

credit cards to cope with the high prices in June.

“It could be they felt they could afford to use their

credit cards in June because of the tax rebate checks,” said

Gary Thayer, senior economist for Wachovia Securities in St.

Louis.

“We will be watching the credit numbers in the next month

or two to see if that is what they were doing,” Thayer said.

The U.S. Treasury Department said it sent out 112.4 million

stimulus payments, injecting $91 billion into the U.S. economy.

In February President George W. Bush signed the $168

billion, two-year economic stimulus package into law to stave

off a recession.

According to government data, the tax rebate checks failed

to give a better boost to retail sales June and that much of

that appears to have been reflected in May’s gains.

Revolving credit, made up of credit and charge cards,

increased $5.49 billion, or a 6.8 percent rate, to $968.35

billion in June. This compares to a May increase of $6.07

billion, or 7.61 percent.

Non-revolving credit, which includes closed-end loans for

big-ticket items like cars, boats, college educations and

holidays, rose $8.84 billion, or a 6.6 percent rate, to $1.618

trillion. This compares to a May increase of $1.98 billion, or

1.48 percent.

(Reporting by Nancy Waitz, Editing by Chizu Nomiyama)