U.S. personal spending slowed to a crawl in February even as inflation showed signs of relaxing, according to a government report released today.

Personal consumption increased by 0.1% compared to the month before, the U.S. Commerce Department said. The performance in February was the weakest since a 0.1% dip in September 2006.

“American consumers are bracing for the harshest financial conditions in decades, as falling home prices carve wealth, high energy/food costs erode buying power, and tighter credit conditions crimp borrowing,” wrote Sal Guatieri, senior economist at BMO Capital Markets, in a morning commentary.

The report showed personal income increased at a seasonally adjusted rate of 0.5% compared to the month before. Income rose an unrevised 0.3% during January.

Income growth came in below economists’ forecasts, which were expecting a 0.3% increase in personal income during February and a 0.1% drop in consumer spending.

Consumer spending makes up about 70% of U.S. gross domestic product.

Adjusted for inflation, consumer spending in February was flat, according to the report. The data revealed a price index for personal consumption expenditures rose 0.1% in February compared to the prior month. It rose 0.3% in January. The PCE price index excluding food and energy, or core PCE, also rose 0.1% in February.

Compared with a year earlier, the PCE price index climbed 3.4% in February. The year-to-year climb in January was 3.5%.

The PCE price index excluding food and energy, year over year, climbed 2% in February. The gauge rose 2% in January as well. The U.S. Federal Reserve watches the year-to-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%.

February disposable personal income—income after taxes—increased 0.5%.

“With U.S. consumers being buffeted by slowing economic activity, high gas prices and a deteriorating labour market, the tightening of purse strings is likely to continue,” said TD Securities economics strategist Millan Mulraine. “This is particularly worrying since the U.S. consumers have remained the bastion of the U.S. economic activity (accounting for about 70% of the economy), and the slowdown in spending will likely prolong the economic downturn.”