Consumer spending slowed in April as income gains weakened, a sign the biggest part of the economy may be faltering.

The 0.2 percent rise in spending followed a 0.4 percent increase in March, the U.S. Commerce Department said today in Washington. Incomes grew 0.2 percent, bolstered in part by income tax rebates, and the Federal Reserve’s preferred measure of inflation moderated.

Higher fuel costs, smaller wage gains and lower home values have shaken Americans’ confidence, raising the odds that spending will keep slowing, Bloomberg said.

Government tax rebates may provide a temporary boost to economic growth in coming months.

Economists had forecast spending would rise 0.2 percent, after an originally reported 0.4 percent increase in March, according to the median of 73 estimates in a Bloomberg News survey. Projections ranged from no change to a gain of 0.5 percent.

Incomes were forecast to rise 0.1 percent, according to the survey. The increases masked a drop in employee compensation that was last exceeded in April 2007.

The report contained good news on inflation for Federal Reserve policy-makers. The central bankers’ preferred gauge of prices, which excludes food and fuel, rose 0.1 percent after a 0.2 percent gain the previous month. It was up 2.1 percent from April 2007.

Adjusted for inflation, the figures used in calculated gross domestic product, spending was unchanged after a 0.1 percent gain the prior month, the report showed.

Disposable income, or the money left over after taxes, increased 0.2 percent, after increasing 0.3 percent the previous month.