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Consumer prices plunge

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Consumer prices fell 1 percent last month, more than forecast and the most since recordkeeping began in 1947, after being unchanged the prior month, the U.S. Labor Department said in Washington. So-called core prices, which exclude food and energy, unexpectedly fell for the first time since 1982.

Deflation could worsen what some economists already call the deepest recession in decades, by making debts harder to pay off and countering the impact of cuts in interest rates.

“We are moving into an environment where prices are falling across the board,” David Resler, chief economist at Nomura Securities International Inc. in New York, said in an interview with Bloomberg Television. “That is going to continue. Deflation is spreading across the economy.”

A separate government report today said housing starts fell 4.5 percent in October to an annual rate of 791,000, the lowest level since the U.S. Commerce Department began keeping the data in 1959.

Prices for consumer goods increased 3.7 percent in the 12 months to October, the smallest year-over-year monthly gain since October 2007.

Energy expenses dropped 8.6 percent, the most since 1957. Gasoline prices fell 14 percent, the biggest decline in four decades.

The cost of all services, excluding fuel, was unchanged, the first time it hadn’t increased since 1982.

The Labor Department report also showed that wages increased 1.4 percent after adjusting for inflation, following no change in September. They were still down 0.9 percent over the last 12 months.