The current heavy dose of inflation being experienced across the nation is not due to a lack of compliance with President Carter's voluntary price standards, a top administration official said today.
Speaking to the American Society of Newspaper Editors, Robert Russell, deputy director of the Council on Wage and Price Stability, said the rapid inflation is due to unanticipated factors-such as severe winter weather and sharp increases in oil prices by producing nations-as well as such anticipated factors as increased minimum wages and social security taxes.
He said that when areas that the president's voluntary price standards do not touch-food, energy, interest rates-are excluded from the consumer price index, the inflation rate is 6.5 percent rather than 13 percent.
The editors laughed at that point in Russell's address, but he contended that this explains the "apparent paradox between widespread compliance with the price guidelines and rapid inflation."
[In Washington, meanwhile, Treasury Secretary W. Michael Blumenthal said the administration sees no possibility of a recession this year. He also forecast brighter economic news but acknowledged it is a "very difficult trick" to slow down growth without throwing the economy into a tailspin." He spoke to a Michigan Democratic luncheon, United Press International reported.]
Russell said the shocks that caused inflation to jump in the early part of the year should be "behind us" and he predicted that the rate of price increases should ease in the summer and fall. But he would make no specific projections.
Of more than 600 investigations of price increases, there have been only 10 to 15 instances of "probable non-compliance," he added.
Citicorp chairman Walter W. Wriston was sharply critical of the guidelines in an address to the editors. He said the guidelines not only disrupt the normal economic processes but also raise threats to individual liberties.
"If you put a floor under wages and a ceiling over prices, the free man cannot long stand erect," the banker said.
By imposing wage-price restraints, the government is trying to cover up the results of its monetary and fiscal policies and achieve price stability at the expense of individuals and companies, Wriston contended.
He told the editors that they would not stand it for a second if the government took similar steps to suppress news of political riots on the grounds of maintaining political stability.