* Dollar slips but eyes best month since Jan. 1997

* Dollar index up over 5 pct in August

* Euro shrugs off soft inflation data

(Recasts with reaction to U.S. data, updates prices, adds comment, changes byline, changes DATELINE, previous LONDON)

By Nick Olivari

NEW YORK, Aug 29 (Reuters) - The U.S. dollar slipped on Friday with investors betting the currency's steepest monthly rise in over a decade was too far, too fast.

A report showing U.S. personal income tumbled unexpectedly in July, and spending slowed as the effects of government stimulus wore off, and an inflation measure at a 17-year high, had little impact on trading. For more details, click [nN28346862].

The euro was resilient in the face of lower than forecast euro zone inflation and weak sentiment indicators, as hawkish rhetoric from policymakers raised expectations for higher euro zone interest rates. [ID:nLT484244].

European Central Bank Governing Council member Klaus Liebscher echoed comments from other policymakers earlier in the week that inflation is too high [ID:nLT331903].