(Reuters) - Fitch Ratings said on Wednesday it expects the U.S. Federal Reserve to cut interest rates twice this year - in September and December.

"A soft landing is likely with moderating inflation and low unemployment, and we are projecting annual economic growth of 2.1%, down from 2.5% in 2023," the ratings agency said.

U.S. prices increased moderately in June as declining cost of goods tempered a rise in the cost of services, underscoring improving inflation environment that economists and analysts expect could help the Fed to begin cutting rates in September.

The report from the Commerce Department on Friday showed consumer spending slowed a bit last month. Signs of easing price pressures and a cooling labor market could boost the confidence of Fed officials that inflation is moving toward the U.S. central bank's 2% target.

Fitch said U.S. consumer spending continues to hold up well, but it anticipates a modestly weaker credit environment in the second half of the year.

The comments follow earnings reports from several large U.S. banks, payments and consumer companies, which showed a weakening environment for U.S. consumers, with pressure building on the lower-income bracket.

(Reporting by Manya Saini in Bengaluru; Editing by Arun Koyyur)