Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, January 17, 1992 TAG: 9201170147
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
LITTLE INFLATION IN '91
Americans in 1991 enjoyed the second-lowest inflation rate in 24 years, a beneficial byproduct of the stagnant economy and the end of the Persian Gulf War.Consumer prices rose 0.3 percent in December and 3.1 percent for the year, the Labor Department said Thursday.
Two-thirds of the improvement over 1990's 6.1 percent rate came from a 7.4 percent drop in energy prices.
The cost of gasoline and fuel oil skyrocketed in 1990 when Iraq invaded Kuwait, and then fell after Saudi Arabia increased its production to compensate and increased world supplies.
"Saudi Arabia has been saying thank you to George Bush," said economist Donald Ratajczak of Georgia State University.
Food and beverage prices, held back by a sharp drop in meat costs, rose a modest 2.5 percent last year, the smallest increase since 1976, the government said.
But even excluding the volatile food and energy sectors, inflation still declined. The so-called core rate was 4.4 percent in 1991, down from 5.2 percent in 1990.
The 1991 inflation rate for all consumer items was the best since 1986, when prices rose 1.1 percent, and the second lowest since 1967.
"We have some problem areas like health care and college tuition, but if you take that out, you're really talking about a minuscule amount of inflation," said economist Lawrence Chimerine, senior adviser to DRI-McGraw Hill, a consulting firm in Lexington, Mass.
With most analysts expecting only a weak economic recovery this year, the prospect is good for only moderate inflation, between 3 percent and 3.5 percent.
During last year's economic stall, consumers were reluctant to borrow and spend. That's forced retailers to hold the lid on prices or see erosion of already lackluster sales.
Meanwhile, rising unemployment has kept wages - and thus the price of services - from advancing as strongly as 1990.
Separately, the Labor Department said first-time claims for unemployment insurance fell to 403,000 for the week ending Jan. 4 from 452,000 the previous week.
Analysts cautioned against reading too much into weekly fluctuations in the volatile number. Because it was a holiday week, laid-off workers had one less day than usual to file claims.
In a third report, the department said American's average weekly earnings, after adjusting for inflation, increased 0.7 percent in December. But real weekly earnings were up just 0.3 percent over the year.
The Labor Department offered these details on prices in 1991:
Meat fell 2.1 percent after rising 11.3 percent in 1990.
Restaurant meals rose 2.9 percent, the smallest increase since 1964.
Alcoholic beverages were up 9.9 percent, the most since 1974, because of increased federal excise taxes.
Tobacco prices rose 11.1 percent.
Fuel oil fell 19.9 percent after a gain of 29.9 percent in 1990.
Gasoline dropped 16.2 percent after shooting up 36.8 percent.
New-car prices rose 3.2 percent, but auto financing costs fell 7.1 percent.
Tuition rose 9.8 percent.
Medical care was up 7.9 percent, not as bad as the 9.6 percent advance in 1990.
Nationally, in December alone, there were substantial increases for dairy products, 1 percent; hotel lodging, 1.8 percent; electricity, 1.6 percent; airline fares, 3 percent; medical care, 0.8 percent; and tobacco, 1.1 percent. They offset declines for fuel oil, 2.3 percent, and jewelry, 8.2 percent.
Lettuce prices fell 15.7 percent in December, after the white-fly infestation in California drove costs up 44.5 percent in November.
The various changes in the month put the index for all consumer items at 137.9 points. That means a hypothetical selection of goods that cost $100 in the 1982-84 base period, cost $137.90 in December 1991. They cost $133.80 a year earlier.