WASHINGTON U.S. labor costs increased less than expected in the second quarter as wage growth cooled a bit, offering a boost to the Federal Reserve in the fight against inflation.

The Employment Cost Index, the broadest measure of labor costs, rose 1.0% last quarter after advancing 1.2% in the January-March period, the Labor Department said on Friday.

Economists polled by Reuters had forecast the ECI rising 1.1%. Labor costs increased 4.5% on a year-on-year basis after shooting up 4.8% in the first quarter.

The ECI is widely viewed by policymakers and economists as one of the better measures of labor market slack and a predictor of core inflation, because it adjusts for composition and job-quality changes.

The Fed on Wednesday raised its policy rate by 25 basis points to the 5.25%-5.50% range, a level last seen just prior to the 2007 housing market crash and which has not been consistently exceeded for about 22 years.

Annual wage growth is gradually slowing after peaking last year, in line with some easing in labor market conditions.

Wages and salaries increased 1.0% in April-June quarter after rising 1.2% in the prior three months. They were up 4.6% year-on-year after advancing 5.0% in the first quarter. Wage growth continues to exceed pre-pandemic rates.

Private sector wages gained 1.0% after climbing 1.2% in the January-March quarter. They advanced 4.6% year-on-year. State and local government wages rose 0.8% after increasing 0.9% in the prior quarter. They advanced 4.7% year-on-year.

Inflation-adjusted wages for all workers accelerated 1.7% on a year-on-year basis after being unchanged in the first quarter. Benefits increased 0.9% last quarter after rising 1.2% in the January-March period. They increased 4.2% year-on-year.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)