U.S. consumer prices fall; core capital goods orders rise

[February 26, 2015] WASHINGTON (Reuters) - 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 increased 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.

Economists polled by Reuters had forecast core capital goods orders increasing 0.3 percent in January after a previously reported 0.1 percent dip in December.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)

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