Wholesale prices in record plunge

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Wholesale prices in sharp decline in October - Nov. 18, 2008

NEW YORK (CNNMoney.com) -- Wholesale prices fell by a record amount in October as energy costs continued to decline, government figures showed Tuesday.

The Labor Department's Producer Price Index (PPI) decreased 2.8% in October, after easing 0.4% in September. It was the sharpest one-month decline on record and much more than the 1.8% decline that economists surveyed by Briefing.com had expected.

The so-called core PPI number, which excludes food and energy prices, rose 0.4% - more than the 0.1% increase analysts had forecast.

"Needless to say this is all about energy prices," said Ian Shepherdson, chief economist at High Frequency Economics.

Energy prices plummeted 12.8% in the month after falling 2.9% in September. It was the largest one-month decline since July 1986 when energy prices fell 14%. That includes a 24.9% drop in gasoline prices, which fell 0.5% a month earlier.

The decline comes as crude oil prices have fallen more than 60% to roughly $55 a barrel since the summer's all-time high above $147 a barrel.

The index for residential natural gas slid 5.9% and prices for home heating oil moved down 9.6% in the month.

Meanwhile, food prices declined 0.2% after climbing for the last 5 months.

The 0.4% increase in core PPI was driven by a sharp 2.6% jump in light truck prices, which include sport utility vehicles, and higher prices for other capital goods.