BACK TO THE DILEMMA: The wholesale price index, which is a sort of early warning system against attacks of inflation, is briskly marching upward agaiign. Unfortunately, the greatest rises are in the commodities that are hardest to manage. While the present rate is not unusually highgh, we have once again reacheddch the point at which the administration anxiously begins to repeat that there's no cause for anxiety.
Food prices are bouncing around a lot, as usual; industrial commodities are rising more slowly, but with an ominous momentum. The wholesale price index, which is a sort of early warning system against attacks of inflation, is briskly marching upward again. Unfortunately, the greatest rises are in the commodities that are hardest to manage. While again reached the point at which the administration anxiously begins to repeat that there's no cause for anxiety.
Food prices are bouncing around a lot, as usual; industrial commodities are rising more slowly, but with an ominous momentum. The wholesale price index tracks some 2,700 different kinds of goods, and it's always instructive to see precisely which ones are causing the trouble.
Among the agriculture products, most of the biggest price increases last month were in coffee, cocoa and tea - all of them imported. There's not a great deal that Americans or their government can do about it except, of course, to drink less coffee, tea and cocoa. That idea doesn't seem to have much appeal. Should you switch to milk? The administration's excessively generous increase in the support price for milk will probably show up in next month's figures.
But since the monthly figures are erratic, it also helps to look at a longer span of time. Over the past year, it's striking that the biggest price increases have usually involved raw materials. That's had luck, because it's th raw materials whose prices are most directly set by world trade and least easily restrained by national policy.
Wholesale prices of farm products, for example, went up last year almost twice as fast as processed foods and feeds. You can see the same apttern among the industrial goods. The really severe price increases since last spring have been in fuel and power, lumber, leather, metals and metal products. At the other end of the scale, the below-average price increases were in chemicals, textiles, automobiles and machinery.
Labor and wages don't seem to be the primary cause of what's happening currently. Inflation is most severe among the materials that go into the factory, and the fuel that runs it, rather than the highly fabricated goods that come out.The statistics keep leading you back to two basic industries, oil and metals, and to a variety of limited resources from natural ga sto trees.
The prominent place of the fuels among the finlation leaders is hardly going to help the Carter administration. The President is to bring out his energy program later this month, and it can hardly avoid raising some of these fuel prices even further and faster, as a deliberate act of national policy. Those fuel price increases are essential to stabilize the conomy, but their first effect will inevitably be to increase an inflation rate that is already higher than anyone considers healthy.
There's always one way that people can at least soften the impact of inflation on their budgets. They can spend less on the things whose prices are rising most rapidly, and more on the things whose prices stay put. But it's not an altogether inviting prospect. Cutting down on oil and steel isn't going to be any easier, after all, than cutting down on coffee.