A key measure of U.S. inflation rose .8 percent in June, the fastest rate in nearly three decades.
Soaring energy costs boosted prices and reduced the benefit of the tax rebate checks Washington sent out to spur economic growth.
Monday's report from the Commerce Department says June's consumer spending growth slowed to .6 percent from the prior month. Consumer spending drives about two-thirds of the U.S. economy.
Inflation worries top the agenda as leaders of the U.S. central bank gather in Washington to consider interest rates. Federal Reserve officials are caught between the need to keep rates low to maintain economic growth and the urge to raise rates to fend off inflation.
Most economists expect the Fed to keep rates steady at two percent when they announce their decision Tuesday.