An inflation gauge closely tracked by the Federal Reserve remained low last month, adding to signs of cooling price increases and raising the likelihood that the Fed will leave interest rates unchanged when it next meets in late September.

Thursday's personal consumption expenditures (PCE) report from the Commerce Department showed that prices rose just 0.2% from June to July, the third straight modest increase. Compared with a year earlier, prices rose 3.3% in July, up from a 3% annual increase in June. The year-over-year figure, though, is down sharply from the 7% peak it reached a year ago, though still above the Fed's 2% inflation target.

The latest PCE data follows other recent reports that suggest the economy and the job market may be slowing enough to cool inflation pressures. The number of advertised job openings, for example, tumbled in July, and fewer Americans are quitting their jobs to seek better opportunities. Both trends ease the pressure on companies to raise pay to find and keep workers — a move that tends to perpetuate inflation as employers raise prices to offset their higher labor costs.

Excluding volatile food and energy prices, “core” inflation ticked up just 0.2% from June to July, the same as from May to June. Compared with a year earlier, core prices rose 4.2%, up slightly from 4.1% the previous month. The year-over-year core figures rose partly because of much smaller price increases a year ago. The Fed's policymakers closely monitor core prices as a telltale signal of where inflation might be headed.

The inflation gauge that was issued Thursday, called the personal consumption expenditures price index, is separate from the better-known consumer price index. Earlier this month, the government reported that the CPI rose 3.2% in July from a year earlier, down from a peak of 9.1% in June 2022.