The collapse of commodity values caused by the global recession has triggered a record fall in US producer prices in October.

New figures show that as the world's biggest economies stagnated, consumption of oil and other commodities sank, with the price of gasoline in the US falling by 30 per cent in October alone.

The fall in energy costs is feeding through into manufacturing costs, according to new data published today by Washington's Labour Department, and producer prices fell by a record 2.8 per cent last month. Despite the record fall, the Dow Jones industrial average was closed up 151.71 at 8,424.75.

US producer prices are a measure of how much money manufacturers in America receive for the goods they make.

A fall in producer prices applies pressure on consumer prices — the main measure of inflation.

As energy prices fall, the operating costs of manufacturers decline for meeting ordinary utility bills and for the price of many of the basic materials and chemicals they use to make their goods. Energy costs fell 12.8 per cent in October, the biggest decline for 22 years.

The record slide in producer prices has validated recent moves by Ben Bernanke, chairman of the US Federal Reserve, to dramatically slash interest rates over the last few months as the threat of inflation faded.

Mr Bernanke had been reluctant to significantly cut interest rates earlier in the year, which would have thrown a lifeline to businesses because he was anxious that a reduced cost of borrowing could spur inflation.

Before the banking crisis erupted three months ago, Mr Bernanke remained worried that inflation posed a real threat to the US economy as oil and food prices remained persistently high. It is widely expected that the Fed will cut rates again by at least a half a percentage point when it is next scheduled to meet on December 16.

While core producer prices, which exclude food and energy, shot up four times faster than expectations to 0.4 per cent over the month, many economists believe the rise to be a hangover from the period of a high oil price and will soon fall. The core number includes items such as trucks, farm equipment, soaps and detergents and tyres.

Ian Shepherdson, chief US economist at High Frequency Economics, said of the core rise: "We view these as legacy increases following the surge in commodity prices, which is now reversing. Core crude prices fell a huge 17 per cent month on month, and are now down 3.1 per cent year on year."

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