June personal consumption expenditures price index up 0.1
PCE inflation increases 2.5 yearonyear
Core PCE price index gains 0.2; up 2.6 yearonyear
Consumer spending climbs 0.3; income rises 0.2

WASHINGTON, July 26 Reuters U.S. prices increased moderately in June as the declining cost of goods tempered a rise in the cost of services, underscoring an improving inflation environment that could position the Federal Reserve to begin cutting interest rates in September.

The report from the Commerce Department on Friday also showed consumer spending slowed last month. Signs of easing price pressures and cooling demand could boost the confidence of Fed officials that inflation is moving toward the U.S. central bank39;s 2 target.

Inflation continues to moderate and is slowing approaching the Fed39;s target, said Jeffrey Roach, chief economist at LPL Financial. At the upcoming meeting, we should expect the Fed to highlight the slowdown in hiring as one reason to cut rates at the September meeting.

The Fed will hold its next policy meeting on July 3031.

The personal consumption expenditures PCE price index nudged up 0.1 last month after being unchanged in May, the Commerce Department39;s Bureau of Economic Analysis reported. Goods prices dropped 0.2 after falling 0.4 in May.

Prices for motor vehicles and parts declined 0.6. Furnishings and durable household equipment prices dropped for a third straight month, but the cost of other longlasting manufactured goods rebounded…