WASHINGTON (Reuters) – US consumer prices fell over the past year for the first time since 2009 as gasoline prices continued to tumble, which could allow a cautious Federal Reserve more room to hold off on raising interest rates.
Other data on Thursday showed a rebound in business investment spending plans and a steadily firming labor market, suggesting the move into deflation territory would be brief. In addition, gasoline prices have been rising in recent weeks.
“We believe the Fed will wait until September before achieving liftoff on interest rates and, even then, the process of normalisation will move at a glacial pace,” said Diane Swonk, chief economist at Mesirow Financial in Chicago.
The Labor Department said its Consumer Price Index fell 0.1 per cent in the 12 months through January, the first decline since October 2009 and a sharp deceleration from December’s 0.8 per cent rise.
The CPI dropped 0.7 per cent from December, the largest fall in six years, after slipping 0.3 per cent in the prior month.