Americans are earning more money — but becoming increasingly cautious about spending it, according to new federal data released Wednesday that show households are also putting more money into savings.

Personal income increased 0.4% in July, while disposable income rose 0.5%, according to new data released Wednesday by the U.S. Bureau of Economic Analysis. After accounting for inflation, disposable income still increased 0.4%. Consumer spending, by comparison, rose just 0.2% — and was essentially unchanged after inflation.

Americans also saved more of what they earned. The personal saving rate increased to 3.0% in July from 2.6% in June, while total personal savings reached $712 billion. The shift suggests households are rebuilding at least some financial cushion rather than immediately spending every additional dollar coming in.

The slowdown doesn’t mean consumers have stopped spending. Spending on services increased by $86.2 billion in July, while spending on goods fell by $49.9 billion. Overall consumer spending still increased, but the shift suggests Americans directed more of their money toward services while pulling back on purchases of physical goods.

Inflation remains part of that calculation. The Federal Reserve’s preferred PCE inflation gauge was 3.7% higher than a year ago in July, while core inflation remained at 3.3%. For household budgets, that means incomes are finally gaining some ground in real terms — but prices are still rising considerably faster than the Fed’s 2% target.