US inflation remained negative in January due to steep falls in the price of petrol, official figures have shown.
The Consumer Price Index fell by 0.7% in the month, and by 0.1% from a year earlier - the first annual drop in five years - the Department of Labor said.
Petrol prices fell by 18.7% in January. Had petrol prices remained stable, the index would have risen by 0.1%. Earlier this week, US Fed Chair Janet Yellen said she expected inflation to start rising in the coming months.
Petrol prices were likely to stabilise as oil price falls began to moderate, she said. US rates have been close to zero since 2008. Analysts said a short period of falling prices would do nothing to damage the US economy.
"The annual rate of inflation fell to -0.1%, which is technically a 'deflation,'" said Capital Economics. "But this deflation is nothing to worry about. For a net importer of oil like the US, lower gasoline prices are a good thing".
The US economy is performing well, with growth in the final three months of 2014 coming in at 2.6% and unemployment falling.
But negative inflation is making it hard for the Fed to raise interest rates. Most analysts believe rates will begin to rise later this summer, or in the autumn.
bbc.com
The Consumer Price Index fell by 0.7% in the month, and by 0.1% from a year earlier - the first annual drop in five years - the Department of Labor said.
Petrol prices fell by 18.7% in January. Had petrol prices remained stable, the index would have risen by 0.1%. Earlier this week, US Fed Chair Janet Yellen said she expected inflation to start rising in the coming months.
Petrol prices were likely to stabilise as oil price falls began to moderate, she said. US rates have been close to zero since 2008. Analysts said a short period of falling prices would do nothing to damage the US economy.
"The annual rate of inflation fell to -0.1%, which is technically a 'deflation,'" said Capital Economics. "But this deflation is nothing to worry about. For a net importer of oil like the US, lower gasoline prices are a good thing".
The US economy is performing well, with growth in the final three months of 2014 coming in at 2.6% and unemployment falling.
But negative inflation is making it hard for the Fed to raise interest rates. Most analysts believe rates will begin to rise later this summer, or in the autumn.
bbc.com
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