Producer Prices Plunge in October on Lower Energy

Washington, DC, Nov. 18, 2008--Wholesale prices fell a record amount in October as energy prices fell by the largest amount in 22 years.

The Labor Department reported Tuesday that wholesale prices dropped by 2.8 percent in October, the biggest one-month decline on records that go back more than 60 years.

The overall decline in the department's Producer Price Index was bigger than the 1.8 percent drop analysts had expected. However, core inflation, which excludes energy and food, was not as well-behaved, rising by a bigger-than-expected 0.4 percent.

The rise in core inflation did not alter the view that plunging energy prices and a sharply slowing economy were combining to slash inflation pressures.

Analysts said much of the jump in core prices reflected the lingering impact of the huge rise in energy costs earlier in the year and should retreat in coming months as those costs continue to fall.

The PPI report showed that energy prices dropped by 12.8 percent in October, the biggest one-month fall since a 14 percent decline in July 1986.

All types of energy showed big declines with gasoline falling by a record 24.9 percent, surpassing the old mark of a 22.1 percent drop in March 1986.