Chris Coleman's men have endured a poor year with just one win over Scotland coming in between six defeats, which has left their chances of qualifying for the 2014 World Cup all but extinguished.
They have fallen behind fellow Group A strugglers Scotland, who drop two places to 72nd, while Republic of Ireland have fallen six spots to 42nd.
Northern Ireland are the only home nations side to improve upon their ranking.
Michael O'Neill's side rose 17 places in the last rankings - into the top 100 - and their improvement continues this month, rising four places to 96th.
Spain finish the year at the top spot, with Germany and Argentina remaining in second and third respectively, while Italy move into fourth spot.
A run of six wins in eight games in 2012 has seen Colombia move up from 36th at the end of last year and into the top five, while Portugal have drifted three places to seventh.
Holland, Russia and Croatia complete the top 10, while 2014 World Cup hosts Brazil - playing only friendly fixtures in recent months - are down in 18th spot.