The U.S. Department of Labor on Wednesday announced the consumer price increase rate fell by 1 percent in October month-on-month, a 61-year low since 1947 when statistics began. U.S. consumer prices have been on the decline since August.

U.S. Federal Reserve Vice Chairman Donald Kohn said, "I thought that risk was four or five months ago; I think it's bigger now, even if it is still small." He added the Fed should not allow deflation to "get ahead of us, to be aggressive."

The Financial Times predicted the Fed will cut the benchmark interest rate from the current 1 percent to 0.5 percent next month.

Prices have also begun falling in Europe. Consumer price increases in the U.K. in October were up 4.5 percent, down from a 5.2 percent rise the previous month, AP reported. This is the sharpest drop since 1992, when the U.K. began compiling statistics. The Bank of England predicted inflation will fall to 1 percent by early 2010 despite a current target goal of 2 percent. The consumer price increase rate in France, Germany and the Netherlands also fell in October.

Japan is also concerned. Wholesale prices there in October rose at a five-month low of 4.8 percent, far below the prediction of 5.5 percent. In an interview with Bloomberg, Takashi Nishimura, an analyst at Mitsubishi UFJ Securities, said, "Global deflation has already begun."

(englishnews@chosun.com )