A key gauge on U.S. inflation slowed in June, while consumer spending turned in its weakest performance in nearly a year and personal income grew less than expected, according to a U.S. government report released today.

Personal income rose at a seasonally adjusted rate of 0.4% compared to the month before, the U.S. Commerce Department said. Income increased an unrevised 0.4% in May.

June personal consumption grew 0.1% compared to the month before. Spending increased 0.6% in May; originally, spending for that month was seen 0.5% higher. The 0.1% June increase was the weakest showing since a 0.1% dip in September 2006.

Wall Street economists had called for a 0.5% increase in personal income during June and a 0.2% rise in consumer spending.

Disposable personal income — income after taxes — increased by 0.4% a second month in a row.

Spending on durable goods, those designed to last three years or longer, plunged 1.6% in June, after rising by the same rate the previous month. Nondurable-goods spending was flat in June, after a 1.4% climb in May. Spending on services rose 0.5%, following a 0.1% increase in May.

A price index for personal consumption expenditures rose 0.1% in June compared to the prior month. The index increased by 0.5% in May. The PCE price index excluding food and energy, or core PCE, rose 0.1% for the fourth straight month during June.

Compared with a year earlier, the PCE price index climbed 2.3% in June. The year-over-year climb in May was 2.4%. The PCE price index excluding food and energy, year over year, rose 1.9% in June and 2.0% in May.

The Federal Reserve watches the year-over-year PCE price index excluding food and energy closely for signs of problematic inflation. The central bank’s preferred range for this core gauge is considered to be 1.0% to 2.0%.

Commerce reported personal saving as a percentage of disposable personal income was 0.6% in June. It was 0.4% in May. Previous data had showed May savings at a negative 1.4% — the 26th straight month the yardstick showed red. However, the June report included revised estimates for income, spending and saving back through 2004. As a result, most months during the past two years that had showed a negative saving rate were adjusted to show a positive rate.