Newspaper article THE JOURNAL RECORD

Consumer Prices, Personal Income Rise Only Modestly

Newspaper article THE JOURNAL RECORD

Consumer Prices, Personal Income Rise Only Modestly

Article excerpt

adjusted 0.3 percent last month, led by an abrupt turnaround in energy costs and moderate increases in food and most other commodities, the government reported Thursday.

The increase in the Labor Department's Consumer Price Index, equivalent to an annual rate of inflation of 4.1 percent, followed a 0.2 percent rise the month before.

Analysts said the September figures come close to showing the underlying national rate of inflation at the retail level, now that the precipitous declines in oil and gasoline prices of earlier thisyear have ended.

But because of those previous drops, the nation's 37.4 million Social Security recipients will get just a 1.3 percent cost-of-living increase next January - the lowest annual increase since an inflation factor was added to the benefit formula in 1975.

Each September's CPI report is used for calculating the Social Security benefit increase.

In other new economic reports:

%E The Commerce Department said Americans' personal incomes rose a modest 0.3 percent while consumer spending shot up 1.6 percent last month. The spending surge, which reflected strong car sales, was the biggest since a 1.9 gain in December 1985.

%E Orders to U.S. factories for big-ticket durable goods - including aircraft, heavy machinery and car shipments - shot up 4.9 percent in September, for the biggest increase in almost two years, the department also reported.

Commerce Secretary Malcolm Baldrige called the durable goods report ""one of the key indicators of a strengthening economy.''

But Michael K. Evans, president of a private economic forecasting service here, said that while the durable goods report was evidence ""the economy is finally beginning to pick up,'' the personal income and consumer spending figures ""are very disappointing.''

""Take away cars and (spending) didn't show much change at all,'' Evans said.

As for last month's price activity, energy prices overall shot up 0.7 percent, with gasoline prices up 2.5 percent after a 4.7 percent decline in August. The turnaround in energy costs followed thelate summer agreement by the Organization of Petroleum Exporting Countries to limit production.

However, economists said they see little evidence that energy costs will rise much further through the end of the year - despite the OPEC agreement earlier this week to extend that production agreement.

Food and beverage costs increased 0.4 percent in September, down from 0.9 percent increases in each of the previous two months. Moderate increases in the cost of beef and pork were partially offsetby lower poultry and egg prices.

""It's nice to see food and beverage increases coming down now. We expect to see them in the low growth area for several months,'' said Doug Handler, an analyst for Wharton Econometrics. …

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