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Prices continue to fall in January

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Prices continue to fall in January

Decreasing energy costs result in larger-than-expected CPI drop.

The Consumer Prices Index fell on a seasonally adjusted basis by 0.7% in December, according to the U.S. Bureau of Labor Statistics. This is the largest drop since December 2008, and was driven largely by a significant 9.7% drop in energy costs.

Analysts had expected a decreased of 0.6%.

Over the last 12 months, the index has decreased 0.1%. This is the first 12-month decrease in the index since 2009.

The index for all items less food and energy, known as “core” CPI, increased 0.2%, following a flat December.

Core CPI has increased 1.6% over the last 12 months. 

The fall in consumer prices gives added strength to the argument against the Fed raising interest rates in the near term.

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