The consumer price index declined 0.7% month-to-month after dropping 0.3% in December. Economists expected a 0.6% fall. Over the past 12 months, prices are down 0.1%, the first annual drop since October 2009.
Excluding volatile food and energy costs, prices were up 0.2%. Economists expected a 0.1% increase. Core prices are up 1.6% the past year.
Deflation, or a sustained bout of falling prices on an annual basis, can weaken an economy and even lead to recession. But Paul Ashworth of Capital Economics says the U.S is healthy and last month's drop is likely to be short-lived. He notes core prices rose last month and per-gallon pump prices already have edged up 30 cents the past month.
"This deflation is nothing to worry about," he wrote in a note to clients. "For a net importer like the US, lower gasoline prices are a good thing. Moreover, with the real economy doing well, there is little danger that this temporary bout of falling energy prices will develop into a more insidious debt-deflation spiral."
Gasoline prices notched their sharpest of seven consecutive declines, falling 18.7% last month.
Grocery costs fell 0.2%, their first drop since May 2013. Airline fares decreased 0.3%, and both new and used cars dipped 0.1%.
Rent edged up 0.2% and apparel prices rose 0.3%.
Federal Reserve Chair Janet Yellen told Congress this week she believes unusually low inflation is a "transitory" effect of low oil and gas prices, and an improving economy and labor market should push price increases toward the Fed's annual 2% target by late next year. Although pump prices have edged up recently, they're expected to hold down annual price gains throughout 2015.
Read more: Prices dip on annual basis; first time in 6 years