A release by Department of Labor on Tuesday showed Producer Price Index for finished goods plunged a record 2.8% in October. It was the biggest drop in wholesale prices since 1947, when records begun.  Economists had projected PPI to fall 1.8% in October.

October's decrease in PPI follows a 0.4% decline in September and a 0.9% fall in August.

The index for finished energy goods edged down 12.8% in October following a 2.9% drop in September. Gasoline prices slumped 24.9% after falling 0.5% in previous month.

The index for finished consumer foods decreased 0.2% in October after increasing at the same rate in September.
 
Core producer prices, which exclude food and energy, rose 0.4% in October, matching consensus estimates.

The report said that the Price increases for light motor trucks, civilian aircraft, malt beverages, rubber and rubber products, consumer plastic products, and for commercial non-wood furniture and store fixtures were partially offset by price decreases for passenger cars, pharmaceutical preparations, and for electronic computers and computer equipment.

The index for materials for nondurable manufacturing edged down 4.6% in October following a 2.9% decline in September.

Prices for materials for durable manufacturing plummeted 4.1% in October after falling 3.2% in the previous month.

Prices for materials and components for construction decreased 0.7% in October after climbing 7% in the preceding month.

Slowdown in global economy has severely hit the demand for raw materials and as a result prices of commodities, especially energy has slumped. 

Investors now fear that a prolonged recession will give way to deflation, which in turn will further intensify the crisis in global economy.

On Monday, Office for National Statistics in UK said that the inflation rate eased to 4.5% in October from 5.2% in September.  It was the biggest deceleration since January 1997.