Another report released last night showed construction of new US homes plunged 4.5 percent last month - another record low point.
Labor Department officials said consumer prices fell 1 percent last month, the biggest one-month decline since records began in February 1947. It was twice as much as US analysts had expected.
The big drop reflected not only a huge fall in gasoline and other energy costs but widespread declines in other areas.
Core consumer prices, which exclude food and energy, fell 0.1 percent last month, the first drop in core prices in more than a quarter-century.
The big retreat in consumer prices reflects a remarkable turnaround from just a few months ago when a relentless surge in energy prices raised concerns that inflation could get out of control.
Since that time, the US economy has been jolted by the most serious financial crisis in seven decades, and the turbulence is expected to push the country into a severe and prolonged recession.
The US troubles have quickly spread overseas, depressing growth around the world and cutting into demand for oil and other products. That has resulted in sharp declines in the price of crude oil and other commodities.
While some people worry that the price retreat raises the prospect of deflation - a prolonged bout of falling prices - the general view of economists is that current conditions are not likely to set the stage for such a development.
Severe deflation last occurred in the country during the Great Depression.
The Commerce Department reported that construction of new homes and apartments dropped to an annual rate of 791,000 units from an upwardly revised September rate of 828,000 units.
The slowest pace previously came in January 1991, when the United States was in recession and going through a similar housing correction.
Applications for US home mortgages also declined last week, with loans for purchases of single-family homes falling to their lowest level in nearly eight years.
The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage application activity fell 6.2 percent to 398.6.
