ROANOKE TIMES

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, June 16, 1993                   TAG: 9306160040
SECTION: BUSINESS                    PAGE: B8   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium


INFLATION THREAT IS HISTORY

The cost of living barely rose in May, the government said in a report that prompted one economist to declare: "The inflation scare is over."

The Labor Department said Tuesday the 0.1 percent rise in consumer prices last month reflected the biggest drop in gasoline prices in more than two years and moderation in other areas, including housing, clothing and cars.

Price pressures weren't totally absent. Food costs were driven higher by a 48 percent surge in tomato prices. Medical costs were still rising faster than any other sector of the economy, and tuition prices jumped.

But the small overall increase was a welcome relief from April, when consumer prices climbed by a worrisome 0.4 percent.

Another report showed Americans' average weekly earnings, after adjusting for inflation, shot up 1.6 percent in May, the biggest increase in more than 13 years. Before the gain, weekly earnings had fallen in six of 12 months.

Private economists said Tuesday's Consumer Price Index and an equally subdued report on wholesale prices Friday should be the start of much better price figures as idle factories and workers continue to keep the lid on prices.

"The inflation scare is over," said Allen Sinai, an economist and managing director at Lehman Brothers in New York. "The earlier surge was related to such things as the weather and did not reflect any changes in the fundamental picture of weak economies and falling inflation around the world."

"Inflation is unlikely to be a threat any time in the near future," said Bruce Steinberg, economist at Merrill Lynch in New York.

So far this year, consumer prices have risen at an annual rate of 3.8 percent. But Steinberg said he thought the rate for all of 1993 would be around 3 percent, little changed from the 2.9 percent of last year, the second-lowest in 27 years.

Gasoline prices fell 2.5 percent, the biggest one-month decline since March 1991. Overall energy costs were down 1 percent.

However, food costs increased 0.6 percent. More than two-thirds of the gain was blamed on the first increase in fruit prices in six months, up 1.4 percent, and a 5.7 percent jump in vegetable prices. Tomato prices surged 48.2 percent.

Excluding the volatile food and energy categories, inflation was up 0.2 percent as a sharp jump in housing costs in April moderated to an 0.1 percent May advance.

Medical costs continued to outpace any other category, climbing 0.8 percent in May - 6.3 percent in the past 12 months.

The various changes left the Consumer Price Index, before adjusting for inflation, at 144.2.



 by CNB