Energy price drop deflates inflation

The producer price index fell by a record 2.8% in October, as energy prices plunged by the largest amount in 22 years, the Department of Labor reported. Economists surveyed by Briefing.com had expected a 1.8% decline. The PPI fell 0.4% in September. Energy prices fell 12.8% in October, which marked the largest one-month decline since 1986. Gasoline prices fell 24.9% in October, following a 0.5% drop in September. The decline comes as the price of a barrel of crude oil was trading n the $55 range on the New York Mercantile Exchange, down more than 60% from an all-time high above $147 per barrel in June. “Even though individuals already see a lot of the impact of lower energy prices at the gas pump, the energy story will unfold over the next few months,” said Charles Lieberman, chief investment officer of Advisors Capital Management LLC in Paramus, N.J., which manages $200 million in assets. Food prices fell 0.2% in September, following five consecutive monthly increases. The core producer price index, which strips out the cost of food and energy, rose 0.4% in October, following an increase of the same size in September. The core rate has increased 4.4% since October 2007.