Show 1 r. r S ON THE CPI AND INFLATION By Babson's Baboons Reports Incorporated Wellesley Hills Mass Index of change in prices of goods and services purchased by city wage wage earner earner and cler den worker ical-worker families to maintain their standard of living This is the definition definition of the Consumer Price Index the CPI the economic indicator that best displays how the Inflationary trend directly affects the consumer We all know that it costs more to live today than it did ten years ago or even one year ago but do we know which seg ments of our spending dollar are increasing increasing in in- creasing the fastest and why Sharp Increases In Past Put Year Var From August 1968 through August 1969 the Consumer Price Index rose by 56 per cent Cost of meats poultry fish home ownership and insurance and financial financial fin fin- ancial service service all all of which rose by more than 9 95 5 per cent showed cent showed the fastest fastest fast fast- est advance during this period There are some areas that have not increased ed as fast as the index itself but none has shown a decline during this time frame The slowest gains were in fruits and vegetables fuels utilities and new cars Food Prices Increase The Most Molt The inflationary trend as reflected by the Consumer Price Index increased ed at a faster rate during the first eight months of 1969 than it did during the same period last year The figures are four per cent for that span of this year as opposed to 31 per cent for the same part of 1968 The area of the sharpest sharpest sharp sharp- est rise during this period was food As Asa a matter of fact If it were not for the unadjusted 12 per cent climb cUm b in food prices since May of this year the Consumer Consumer Consumer Con Con- sumer Price Index for this period would have increased at a slower rate and during the same period last year DurIng During During Dur Dur- ing this time beef prices slackened somewhat but the Increase In other meats resulted in overall higher prices Areas of Increased prices during the most recent month of record were charges charges charges char char- for consumer services property taxes taxes taxes tax tax- es mortgage rates residential gas and electricity Women's apparel declined somewhat during this period but increases increases in in- creases occurred in mens men's and boys' boys clothing and footwear Some other commodity commodity com com- prices including alcoholic beverages beverages beverages bev bev- gasoline and housekeeping supplies sup supplies sup sup- plies also moved substantially higher Prospects Dim For Early Erly Downturn Recent price increases In autos tires major appliances wholesale ground coffee coffee coffee cof cof- fee heating and air conditioning units and health insurance would indicate a continuation of the rise in the Consumer Price Index over the near term However However However How How- ever the Index tends to be a lagging indicator and for the longer pull it would appear a slower growth rate is likely The industrial raw materials price index which Is usually a leading indicator of signs although slight that the Inflation Inflation In In- syndrome is slowing down The rate of advance for this index has decreased decreased de de- creased from 25 6 per cent between December December De De- cember and April to per cent between June and July Any further loss of momentum momentum momentum mo mo- would be a significant symptom of the success of the Administrations Administration's efforts efforts ef ef- forts to curb inflation Another signal of ofa a potential slowdown in the Consumer Price Index is the decline in farm products products products pro pro- ducts prices that began early this summer sum sum- mer Business BUlin Slowdown To Help Other factors to be considered include include in in- clude a general business softening with more evidences of slackening in consumer demand During this sharp climb in the index the wage earner has experienced a rise In Income Workers Work Work- ers as a whole have seen their incomes rise faster than has the CPI However those who can least afford it have been hurt most seriously This is particularly true of the elderly who are on fixed incomes and the poor The wage demands made by the service service service ser ser- vice sector of the economy which has traditionally been underpaid and th the 1 continued lively consumer market for goods and services will result in further fur ther increases in the Consumer Price Index Until inflation Itself has slowed to acceptable levels meaning a slowdown slowdown slow slow- down in wage increases as well as prices the CPI will continue to rise at or close to current rates |