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U.S. import prices plunge
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November 8, 2001: 2:22 p.m. ET
Prices of imported goods post record fall, as export prices also drop.
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NEW YORK (CNNmoney) - Prices on goods imported by the United States fell in October, the government said Thursday, posting the biggest drop on record, while prices on exported goods also fell.
The Labor Department reported its Import Price Index fell 2.4 percent in October, compared with a revised 0.1-percent gain in September. It was the biggest monthly drop since the department first started tracking the number in 1989. Economists surveyed by Reuters expected prices to fall only 0.6 percent.
Petroleum prices fell a whopping 15.7 percent. Excluding petroleum imports, prices only fell 0.4 percent, compared with a revised 0.1-percent drop in September.
Export prices fell 0.7 percent, the biggest drop since a similar decrease in January 1998, compared with a 0.1 percent gain in September. Excluding agricultural exports, prices fell 0.7 percent, compared with a 0.2 percent gain in September.
"The stunning drop in import and export prices in October is the clearest indication that economies around the world, not just in the United States, were hit hard by the Sept. 11 tragedy," said Joel Naroff, chief economist and president of Naroff Economic Advisors.
"The sudden stoppage in U.S. activity hurt oil demand, and we have seen petroleum prices plummet as a consequence," Naroff said. "But as the U.S. economy slowed, so have other economies, and export prices tanked as well."
The Federal Reserve has cut interest rates a record-tying 10 times this year in an effort to ease the impact of an economic slowdown in the U.S. economy, which is the world's largest. The good news from Thursday's report of falling prices is that it's more proof that inflation is not a risk, leaving the Fed room to cut again if it needs to.
"With import prices collapsing, the Fed has little to fear as far as inflation in concerned," Naroff said. 
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