Newspaper article THE JOURNAL RECORD

Wholesale Prices Up Slightly for '93 Down in December

Newspaper article THE JOURNAL RECORD

Wholesale Prices Up Slightly for '93 Down in December

Article excerpt

WASHINGTON (AP) _ Wholesale prices edged up a slight 0.2 percent in 1993, the third straight year of modest inflationary pressures, as declining gasoline prices offset a spurt in food costs in December.

The Labor Department said Wednesday the small increase in its Producer Price Index, which measures inflationary pressures before they reach the retail level, was the best showing since a decline of 0.1 percent in 1991. Wholesale inflation had been up 1.6 percent in 1992.

Excluding the volatile energy and food sectors, wholesale prices rose just 0.4 percent last year, the best showing for the so-called core inflation rate since the government began tracking this figure two decades ago.

"The Federal Reserve has achieved its goal of zero inflation, at least at the wholesale level," said Bruce Steinberg, an economist at Merrill Lynch in New York.

The news on retail prices has been equally encouraging. The government will release its December Consumer Price Index on Thursday. Analysts expected it would show prices up by around 2.7 percent in 1993, marking the third straight year of modest retail inflation as well.

Economists were forecasting a fourth good year on inflation as slack job markets, weakness overseas and falling world oil prices all combine to keep inflation at bay this year as well.

"With the world economy in recession, prices in global markets are under downward pressure," said Gordon Richards, chief economist at the National Association of Manufacturers. He said inflation fears that had been triggered at this time a year ago proved to be incorrect because of the weak global economy.

For December, wholesale prices fell by 0.1 percent as a dramatic drop in gasoline prices was enough to offset a big spurt in food costs.

Gasoline prices fell by 10.4 percent, the biggest one-month decline since August 1989 and a reflection of plunging crude oil prices. …

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