The U.S. central bank is expected to announce a plan to start shrinking its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities at its policy meeting next month.

But low inflation, characterized by sluggish wage growth, suggests the Fed could delay raising rates again until December. It has increased borrowing costs twice this year.

Last month, prices for services fell 0.2 percent, the first decline since February. That accounted for more than 80 percent of the decrease in the PPI. Services were weighed down by a 0.5 percent drop in the index for final demand trade services. Services had increased for four straight months.

The cost of health-care services rose 0.3 percent after being unchanged in June. Those costs feed into the Fed’s preferred inflation measure, the core personal consumption expenditures price index.

Energy prices fell 0.3 percent, declining for a third straight month. Food prices were unchanged in July following a 0.6 percent jump in the prior month.

A key gauge of underlying producer price pressures that excludes food, energy and trade services was unchanged last month. The so-called core PPI gained 0.2 percent in June.

Core goods fell 0.1 percent in July after increasing for eight straight months. The core PPI increased 1.9 percent in the 12 months through July after advancing 2.0 percent in June.

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