Prices for US exports unexpectedly fell in October, a worrisome sign of global economic weakness, while the cost of imports into America declined due to a sharp drop in the price of oil.

Export prices dropped 0.5 per cent last month, the seventh decline in eight months, the Labor Department said today. Analysts polled by Reuters had expected a slight increase in export prices.

The decline suggests that consumers in crisis-stricken Europe and other major trading partners are struggling so much that American producers have little leverage to raise prices.

The European Central Bank, which is struggling to support a recovery, cut interest rates earlier this month in part over concerns the region's weak economy is weighing too much on prices.

The Labor Department’s report also showed that prices for US imports fell 0.7 per cent in October, which was a sharper decline than expected.

A 3.6 per cent fall in petroleum imports, which was the sharpest decline in over a year, drove the drop in overall prices. However, there were signs that weakness abroad was also fueling price declines.

Prices for imports from Japan dropped 0.2 percent last month, a possible sign that Japan’s extremely accommodative monetary policy was putting downward pressure on its exchange rate and making its exports more competitive abroad.

In a possible sign of Japanese competitiveness, prices for auto imports fell 0.1 percent and were down 1.4 per cent in the year through October. The 12-month decline is the biggest drop since the Labor Department began tracking it in 1981. (Reuters)