WASHINGTON -- Rising prices, falling home values, stagnant wages and tight credit. It's a potent combination that has struck the American consumer hard.

In June, the second-biggest rise in prices in nearly three decades muted the impact of billions of dollars in government stimulus payments, government figures showed yesterday.

Incomes barely budged in June and consumer spending retreated after taking into account the higher prices for food, energy and other items, according to Commerce Department data.

That is forcing Americans to decide every day what they can and cannot afford, even for staples.

Ken Sheeley, 54, a nurse anesthetist who lives in Richmond, said his family has become more cost-conscious, stocking up on staples such as spaghetti, flour and sugar at Sam's Club and Costco Wholesale Corp. instead of buying them at the grocery store.

Consumer spending was up 0.8 percent in May and 0.6 percent in June, the Commerce Department said. But those figures were slashed to a modest 0.3 percent increase in May and a drop of 0.2 percent in June when adjusted for rising prices of gas, food and other products. Incomes rose just 0.1 percent.

An inflation gauge tied to consumer spending jumped by 0.8 percent in June, the second biggest monthly increase since 1981. In September 2005, the gauge rose by 1 percent after Hurricane Katrina shut down Gulf Coast oil facilities and sent energy prices soaring.

Economists said the surge in energy and food prices had dampened the impact of the government's economic stimulus program, which was pumping out $76 billion in payments during May and June as Washington sought to keep the economy from falling into a deep recession.

"You've got declining home prices, very tight credit conditions, a soft jobs market and a weak stock market. The consumer has got a lot to deal with," said David Jones, chief economist at DMJ Advisors, a Denver-based consulting firm.

The meager 0.1 percent rise in incomes in June followed a sizable 1.8 percent jump in May. Those results were skewed by how the government accounted for the billions of dollars in rebate checks disbursed during the two months, inflating the May figure and making the June performance look weaker.

The overall economy, as measured by the gross domestic product, grew at a 1.9 percent rate in the April-June quarter, more than double the 0.9 percent increase in the January-March quarter. That improvement reflected in part the stimulus payments, although the effect was softened by a surge in energy costs.

Economists believe the $168 billion stimulus program will continue to lift the economy in the current quarter, but many are worried that the economy could slow significantly in the final three months of this year and early next year as the impact from the one-time checks wears off.

Brian Bethune, senior U.S. economist at Global Insight, a private forecasting firm, said the GDP could post back-to-back declines in those two quarters, meeting the traditional definition of a recession.

"The rebates are not translating into anywhere near the spending impulse that Congress and the administration had hoped for," he said. "Under these circumstances, the economy remains in very fragile condition."