(Bloomberg) -- US services prices excluding housing and energy, a category closely monitored by Federal Reserve Chair Jerome Powell, increased at the slowest annual pace for 18 months in June.

The gauge rose 4% from a year earlier, the slowest pace since the end of 2021, according to Bloomberg calculations based on Bureau of Labor Statistics data published Wednesday.

Fed officials are widely expected to resume interest-rate increases at their upcoming July 25-26 policy meeting. But slowing core services inflation, along with other lower-than-expected readings in the June data, could sway policymakers away from additional tightening in the months ahead.

Read More: US Inflation Cools Sharply, Offering Hope Fed Can Wrap Up Hikes

At a press conference following their meeting last month, Powell told reporters “we see only the earliest signs of disinflation” in core services prices, adding that “many analysts would say that the key to getting inflation down there is to have a continuing loosening in labor-market conditions.”

On a monthly basis, core services prices were unchanged in June — the first time since September 2021 that they haven’t risen. 

A similar gauge that also excludes medical care services, which have been affected in recent months by changes in health-insurer profits, was also flat on a monthly basis. That calculation is more consistent with the inflation gauge the Fed officially targets, which is based on the prices of personal consumption expenditures and isn’t affected by health-insurer margins.

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