An important inflation index showed more signs of steady declines in September, solidifying the chances the Federal Reserve will choose to continue cutting interest rates.

Personal consumption expenditures (PCE) price index, one of the Fed’s preferred inflation indicators, rose month-over-month by 0.2% in September, the Commerce Department’s Bureau of Economic Analysis (BEA) reported Thursday. The index showed an annual inflation rate of 2.1%, which was a decline from August’s reading of 2.3% and close to the Fed’s announced goal of 2%.

The PCE price index measures the changes in the cost of living for households by tracking the prices of a basket of goods and services. The items are meant to reflect how much a typical household spends every month. Both the monthly and annual PCE inflation rates met general market expectations. The report was released one week before the Federal Open Market Committee will decide on another interest rate cut.

Prices for goods during September decreased 0.1%, while prices for services increased 0.3%. Food prices increased 0.4% and energy prices fell 0.2% When excluding the volatile food and energy costs, the PCE price index increased 0.3% for the month and 2.7% on an annual basis.

The PCE price index figures were mild when compared to the volatile prices of goods and services a year earlier. The index for September 2023 showed a monthly price increase of 2.1%, with services spiking 3.7% and food prices up 1.2%. At the same time, energy prices cratered by 8.1%. Excluding food and energy, the PCE price index increased 2.7%.

The BEA report also showed personal income had increased by 0.3% in September, which equates to $71.6 billion. Disposable personal income, which is personal income minus personal current taxes, increased 0.3%, or by $57.4 billion. Personal consumption expenditures increased $105.8 billion, or 0.5%.