Consumer Prices Plunge In October On Record Drop In Fuel Costs

November 19, 2008 4:50 p.m. EST

Washington, DC (AHN) - The Labor Department reported Wednesday its Consumer Price Index fell 1 percent in October as energy prices fell in record amounts. The October pullback is the largest on record since the department began collecting data in 1947.

The decline in prices doubled the 0.5 percent drop economists were expecting for the month. Excluding food and energy, which is referred to a "core prices"; October prices fell 0.1 percent. Economists anticipated a 0.1 percent rise.

Pricing power in the month of October all but disappeared as everything from airline tickets to clothing saw an overall price decline.

Just a few months ago government officials were worried about inflation risks as energy prices surged higher. However, with energy prices falling and a soft consumer climate any further deterioration in prices could lead to concerns of deflation.

In a separate report, the Commerce Department reported new-home starts fell 4.5 percent in October to an annual rate of 791,000. The data was just another sign that the housing market is yet to stabilize.