Inflation in July, as measured by the Federal Reserve’s favored gauge, inched lower on a monthly basis, fueling hopes of an interest rate cut when the central bank meets in September.

The price index of the Personal Consumption Expenditures (PCE) index tends to be more influential on Fed decisions regarding interest rates than the widely-publicized Consumer Price Index (CPI). The PCE measures changes in the value of the goods and services purchased by "persons" who reside in the United States.

July’s results, released Friday by the U.S. Bureau of Economic Analysis (BEA), were generally in line with the expectations of market analysts and buoyed their confidence that rates will be lowered, in light of Fed Chairman Jerome Powell’s recent insinuation a cut might be coming.

The 0.2% increase in seasonally-adjusted PCE prices from June to July was down from June’s 0.3% month-month rise. Prices for both durable and non-durable goods decreased 0.1% from June, while the cost of services rose 0.3%

The PCE core price index – which excluded the price declines for energy (-1.1%) and food (-0.1%) – rose 0.3% June-July, matching the May-June uptick in the core PCE price index.

Compared to the same month one year ago, the PCE price index for July increased 2.6%, unchanged from June’s 12-month rise. Excluding food and energy, the PCE price index increased 2.9% from one year ago, up slightly from last month’s 2.8% June-June increase.

Energy prices were lower than they were the same month a year earlier for the sixth straight month in July, falling 2.7%.