U.S. consumer price index falls 0.7 percent in January

U.S. consumer prices continued to fall in January due to sharply lower gasoline prices, the Labor Department said on Thursday.

Consumer Price Index (CPI), a main gauge of inflation, fell 0.7 percent in January on a seasonally adjusted basis, the largest decline since December 2008, after a decrease of 0.3 percent in December. On a year-on-year basis, the index decreased 0.1 percent before seasonal adjustment, the first year-on-year decrease since October 2009.

The energy index fell 9.7 percent as the gasoline index fell 18. 7 percent in the month, the sharpest in a series of seven consecutive declines. The gasoline decrease was overwhelmingly the cause of the decline in the CPI, said the Labor Department.

Excluding the volatile food and energy categories, the so- called core CPI, rose 0.2 percent in January, compared to a 0.1 percent increase in December. The core CPI was up 1.6 percent from a year earlier.

Both the headline CPI and the core number were below the Federal Reserve's inflation target of 2 percent, triggering market concern over deflation.

However, in her testimony to Congress this week, Federal Reserve chair Janet Yellen said that recent drop in inflation was mainly due to oil price drop, and that the Fed is reasonably confident that inflation will move back over the medium term toward the objective, as the labor market conditions continue to improve further. Endite