U.S. consumer prices in October registered their largest single-month decline since before World War II, a broad-based drop that creates a new challenge for policy makers: avoiding a bout of deflation, a prolonged period of falling prices throughout the economy.

The odds of such an event are still considered small by most economists. But the mere risk puts added pressure on Congress and the incoming Obama administration to quickly advance a large fiscal stimulus plan. It also increases the likelihood that the Federal Reserve...