Prices paid to U.S producers fell sharply in August according to data released on Tuesday, painting a gloomy picture for U.S growth.

The National Association of Home Builders-Wells Fargo Housing Market index dipped two points to 20 in September, the association said in a statement today. The drop matches the record low set in January of 1991 when the economy was in a full recession.

The drop was the largest since a 1.5 percent dip last October, while the 6.6 percent decline in finished energy goods prices last month was the sharpest since an 8.0 fall in April 2003, according to the Labor Department .

The producer-price report is the second of three monthly inflation gauges.

The government said on Sept. 14 that import prices dropped 0.3 percent in August, the first decline in seven months. Results for consumer prices will be issued on Wednesday.

The Federal Reserve responded to the adverse numbers by cutting interest rates by half a percentage point to 4.75 percent, a move designed to soothe the turbulent financial markets.

Oil prices have since rebounded and U.S. crude oil hit a new record of $82.16 a barrel, sending a warning that inflation is still at risk from energy prices.

Other data also alluded to a weak U.S economy.

Research firm RealtyTrac said U.S. home foreclosure filings rose 36 percent in August to 243,947, the highest since it began its monthly report in January 2005 and 115 percent above the year-ago level.

Inflation Wells fargo