The US Federal Reserve's preferred price index held steady in June near a six-year high and just above the Fed's two percent target, but energy prices fell for the month, the government reported Tuesday.

The Fed is due to begin a two-day policy meeting later Tuesday but is expected leave the benchmark interest rate untouched for another six weeks.

(File photo)

The Personal Consumption Expenditures price index, which tracks prices individuals pay for goods and services, rose 2.2 percent compared to June of last year, the same annual inflation rate recorded in May, according to the Commerce Department.

The annual rate for May was revised down by a tenth from 2.3 percent, which was a six-year high.

The inflation index rose 0.1 percent in June compared to the prior month, a tenth of a point slower than May and matching economists' expectations.

Though it is not expected to raise rates this week, the central bank has continued its gradual course of tightening monetary policy this year, hoping to prevent the economy from overheating amid the long-awaited return of inflation, falling unemployment and vigorous GDP growth.

Goods and energy prices both fell 0.1 percent from May offsetting a 0.2 percent rise in food prices.

But excluding the volatile food and fuel categories, which see big swings from month to month, the "core" PCE price index slowed a tenth to 0.1 percent in June, falling short of analyst expectations.

Year-on-year, core PCE held steady at 1.9 percent for the third month in a row.

The signs of persistent price pressures came as consumer spending growth slowed for the second month in a row, rising 0.4 percent, or $57.1 billion, in June. The biggest beneficiaries of increased spending were restaurants and hotels. 

Incomes also rose 0.4 percent, or $71.7 billion, last month.

The Commerce Department last week reported that the world's largest economy grew at a 4.1 percent clip in the second quarter, the fastest in almost four years, likely firming plans at the Fed to raise rates again in September, as they are widely expected to do.

Adding to the good economic news, in a separate report Tuesday, the Labor Department said growth in compensation costs for US civilian workers had gained pace for the third month in a row.

Wages and salaries rose 2.8 percent over June of last year while employee benefits rose 2.9 percent.