WASHINGTON (2/27/15)--Largely fueled by the price of oil, the consumer price index (CPI) dropped 0.7% in January, the largest monthly step back since November 2008 (
On an annual basis, CPI fell 0.1%, the first year-over-year decline since October 2009.
"The good news is that the majority of the weakness is concentrated in energy-related goods and services, as the core index rebounded modestly in January," said Andrew Davis, Moody's analyst (
). "This is comforting for policymakers, as concerns about disinflation bleeding into core prices were heightened after December's soft reading."
The energy index plunged by 9.7% in January, with gasoline prices--the main culprit--plummeting 18.7% from the prior month. Fuel also fell by 9.9%.
Food prices largely remained stable in January after a 0.2% rise in December. "Food at home" prices fell 0.2% with four of the six major grocery store food groups decreasing. "Food away from home" climbed 0.2% after a 0.3% increase the previous month.
Excluding food and energy, core prices climbed 0.2% in January, a slight increase in pace from December.
However, prices for new vehicles, used cars and trucks, and core commodities all fell, offsetting the gains in the core CPI.