Show p i T v I- I Q t DARSON'S i T Tr r r oi REPORT i i iT T Y 2 Rou Boger W W. W BabUla Babson 1 Lots of people are nervous about price inflation and we dont don't blame them Naturally it does make a housewife fidgety to find out how much less her dollar can buy today than it could a year ago And the breadwinner bread brend- winner himself while his income income in- in come is probably moving up somewhat notices how much more he has to pay for household household house house- hold goods and s services e r v 1 c e s to maintain a decent standard of living NO END ill Rr SIGHT To speak very frankly the creeping price inflation that has been going on for so many years shows absolutely no signs of reversing itself Consumer prices for December chalked up their sharpest advance for forthe forthe the month of report in 15 years Goods and services for January cost two per cent more than they did on average only 12 months ago and this is n no small fractional nudge The base period used by the Labor Department is 1957 1959 If a typical city family measured what it was able to buy for 10 during that base period it would find the same purchases now costing 1110 Another way of looking at it For the five years 1964 1960 the average annual increase of consumer prices was 13 But during 1965 the figure pushed ahead to 1 17 70 While the difference difference differ differ- ence may seem small the important important im- im fact is that despite a pause in January the upward trend is still strong and the upside pressures are ing EVEN GOVERNMENT IS WARY Although the White House is eager to hold prices in check incheck so they will not explode into runaway runaway run run- away inflation there is only tentative tentative ten ten- official optimism about the future The Labor Department Department Depart Depart- ment has come right out and admitted that consumer prices are likely to increase even more moreIn morein In 1966 than they dId in 1965 There s pot really too much encouragement in the cautious prediction that the rate of gain is going to advance more in 1966 but not much more There is of course no way of telling when an inflationary Ion a I y off blow dislocate dislocate dislo- dislo might suddenly cate our basic economy If such sucha a thing should happen the inevitable inevitable in- in evitable result would be violent deflation Probably the greatest danger lies in the possible emergence of a speculative psychology the sort of thing that happened in the first year of the Korean War Fortunately there are vast differences differences dif dif- between that time and the present When the trouble broke out in Korea our plant capacity was pitifully inadequate to produce the needed volume of both guns and butter The result was a areal areal real buyers buyers' rush for goods that drove the consumer price index up a spectacular 9 within 12 months VOLUNTARY RESTRAINTS OR COMPULSORY Currently our production of both military and civilian goods is miles ahead of any other in our history In fact it is not far from capacity Hence it is isto isto to be hoped that speculative I consumer buying will not be so frenzied that it will drive prices radically higher Labor Department experts do expect to see the greatest concentration concentration con con- of price gains this year in those items Hems that led the list in 1965 Food shoes medical attention transportation tion home maintenance auto insurance gasoline and tobacco co products which make up upa a bIg part of the home budget The Administration continues to plead for voluntary restraints on both prices and wages Consumers Consumers Con Con- sumers and manufacturers are asked to avoid piling up top top- heavy Inventories that might tIlt the applecart It Is obvious that many of the governments government's economic advisers would truly like to avoid compulsory curbs on prices and pay rates Chances are they may maybe be able to avoid them unless some huge escalation of the Vietnam struggle struggle gle darkens the picture If it does controls will be tried IMPORTANT ITEM O OMITTED But while government officIals officials hammer away at the necessity necessity ne- ne of avoiding price and wage Increases they seem to forget that their own actions compound the problem The price of government Jt at all levels levels lev- lev els is soaring year by year So why not include the price of political administration in the Department or of Labors Labor's Consumer Consumer Con Con- sumer Price Index THE SPOILED LITTLE BOY had rarely left his mothers mother's side in all his five years When he came home to lunch after his first session session ses- ses sion in kindergarten his mother hugged him to her bosom Tell me she asked did you cry at school today No the little terror leered but the teacher did |