Preheat the oven to 350 degrees. Coat a muffin pan with cooking spray. In a medium bowl, mix together the flour, baking powder, nutmeg and salt. Set aside. In a stand mixer or in a large bowl with a hand mixer, cream the butter and sugar together. Scrape down the sides then add in the egg, lemon and vanilla. Beat until well combined. Alternate adding the flour and the milk in two stages. Mix until batter is smooth and there are no lumps.

Evenly divide the batter between each of the 12 muffin cups (it will not look like much, only about 1/3 of the way full). Slice the peaches into 6 wedges, then slice those in half. Place half a wedge of peach into the center of each cake.

Bake for 20 minutes or until the cakes are golden around the edges and a toothpick comes out clean. Cool completely on a wire rack.