US CPI Falls 0.7% Largest since 2008

U.S. consumer prices in January posted their biggest drop since 2008 as gasoline prices continued to tumble, which could give a cautious Federal Reserve ammunition to keep interest rates low a bit longer.

The Labor Department said its Consumer Price Index fell 0.7 percent last month, the largest decline since December 2008, after slipping 0.3 percent in December. It was the third straight month of decline in the index.

In the 12 months through January, the CPI fell 0.1 percent, the first decline since October 2009 and a sharp deceleration from November’s 0.8 percent rise.
 
Economists polled by Reuters had forecast the CPI falling 0.6 percent last month and slipping 0.1 percent from a year ago.

Separately, the Commerce Department said a gauge of business investment plans rebounded in January after four straight months of declines.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending intentions, increased 0.6 percent last month after a revised 0.7 percent fall in December.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza