U.S. consumer prices fell by the biggest amount in the past 61 years in October as gasoline prices plunged by a record amount. The Labor Department reported Wednesday that consumer prices fell by 1 percent last month, the largest monthly decline on record. The decline was twice as big as analysts had expected. The big drop in inflation reflected not only a huge fall in gasoline and other energy costs, but widespread declines in other areas. “Core” consumer prices—which exclude volatile energy and food costs—fell by 0.1 percent in October, the first such decline in more than 25 years. Energy prices fell by a record 8.6 percent in October, led by a record 14.2 percent decline in gasoline costs. Since retail gasoline prices have continued to fall this month, analysts expect a big drop in energy costs in November. Food costs rose 0.3 percent last month, only half the increase recorded in September. Prices fell for clothes, new and used cars, and airline fares. Analysts predicted further declines in the coming months as retailers struggle to attract consumers amid rising unemployment and the slowing economy. Over the past 12 months, consumer prices have risen 3.7 percent, substantially below the 17-year high of a 12-month price increase of 5.6 percent recorded in the summer. Core consumer prices are up 2.2 percent over the past 12 months. October's retreat in consumer prices was in contrast to events of a few months ago, when a spike in energy prices raised worries that inflation could get out of control. Since that time, the economy has been hit by the most serious financial crisis in decades, with the turbulence expected to push the country into a recession.
