Newspaper article THE JOURNAL RECORD

Consumer Prices Up Moderately

Newspaper article THE JOURNAL RECORD

Consumer Prices Up Moderately

Article excerpt

WASHINGTON (AP) _ Consumer prices rose moderately in June and retail sales, except for automobiles, barely advanced, the government said Tuesday in two reports reflecting a lackluster economic recovery.

The Labor Department's Consumer Price Index recorded a 0.3 percent gain last month, propelled in part by the biggest increase in energy prices since just after Iraq invaded Kuwait in August 1990. Price declines for tobacco, vegetables and airline tickets helped offset the increase.

Retail sales rose 0.5 percent to $159.8 billion in June, the Commerce Department said. But without the 1.7 percent sales jump reported by auto dealers, they edged up only 0.1 percent. Sales fell at department stores and were down sharply at building supply and hardware stores.

Separately, auto company reports indicated their latene sales gain in cars and light trucks fizzled this month.

All of the reports conformed with analysts' predictions and provoked little reaction in the stock and bond markets. Economists said the data supported their belief the economy was recovering slowly from the 1990-91 recession with little threat of resurgent inflation.

"The economy is weak and as a result it's awfully hard to increase prices," said economist Donald Ratajczak of Georgia State University. "In fact, you throw out energy and you have very modest inflation."

For the year so far, inflation was running at an annual rate of 3.1 percent, the same as last year's price rise for the full year and well below the 6.1 percent rate in 1990.

Economist Bruce Steinberg of Merrill Lynch in New York said eventually low inflation should help foster sustainable economic growth. But right now the job market is acting as a brake on the recovery. The nation's unemployment in June reached an eightar high of 7.8 percent.

"That means income growth has been very, very subdued and without money there's not a lot of spending consumers can do," he said.

Steinberg and Ratajczak said the muted inflation outlook makes it possible for the Federal Reserve to stimulate growth, if necessary, by further reducing interest rates. …

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