-Millan Mulraine, TD Securities analyst
Fed's preferred gauge of US consumer prices dropped in January partly due to lower oil prices, undershooting the central bank's goal of 2% annual inflation for the 33rd straight month. The price index for personal consumption expenditures climbed 0.2% in January from the previous year, following the annual growth of 0.8% in December, the Commerce Department reported. It was the lowest level for headline inflation since October 2009, when prices ticked up 0.1% from a year earlier after seven months of year-on-year price drops as the 2007-2009 recession ended. Excluding volatile categories of food and energy, consumer prices climbed 1.3% in January from the previous year, unchanged from annual growth of 1.3% in December. Measured on a monthly basis, prices declined 0.5% in January from the preceding month, while core prices ticked up 0.1% from December.
Meanwhile, the Institute for Supply Management said US factories increased their activity at the slowest pace in more than a year in February, with the corresponding index dropping to 52.9, down from 53.5 in January. In contrast, Markit reported that manufacturing activity across the US posted another solid month in February. Markit's final PMI rose to 55.1 compared with 53.9 in January. The reading marked the highest level since October last year, when it reached 55.9.
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