THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Monday, February 6, 1995 TAG: 9502040524
SECTION: BUSINESS WEEKLY PAGE: 20 EDITION: FINAL
SOURCE: BY HOWARD SIMON, JOURNAL OF COMMERCE
LENGTH: Short : 48 lines
Prices will rise this year, if only for the cars we drive and the clothes we wear, economists said.
This inflationary sentiment is reflected in the 2.2 percent rise since December in The Journal of Commerce Industrial Price Index.
The index on Jan. 24 climbed to a 52-week high of 115.89, as measured against a 1990 base of 100. Last Thursday, the index closed at 113.87.
Since Dec. 1, the index, which was then at 113.35, has risen 2.54 points.
The yardstick of price movements of 17 non-food commodities suggests inflation has not yet peaked and could rise over the next year,said Anirvan Banerji, an economist at Columbia University's International Business Cycle Research Center.
``When you see the magnitude of this rise, when nearly all components rise in unison, then we can say the peak is not yet in sight,'' he said. ``We only know when the index has reached its high for the cycle only after it's moved lower for some time.''
Cotton, steel scrap and rubber are among the most active components rising in the index. The price of the steel scrap has hardened as primary steelmaking rises in response to a more active economy.
Textiles and metals tracked by the index outshined most commodities recently; all components of the index are at their highest levels since 1993 and more than half of them the highest since 1990, Banerji said.
Scrap steel prices last week reached highs of $142.33 a metric ton amid brisk demand for auto-grade steel sheets. A stronger U.S. economy has spurred growth in steel production, of which scrap steel is an integral part.
Analysts said impending cotton shortages in major producing countries are pushing raw cotton to the $1 a pound level. Except for especially good crops in the United States and Europe, drought-ravaged crops in India and Pakistan have generally faired poorly.
The result would be increased costs to cotton yarn manufacturers and textile mills later this year and probably will show up as higher-priced cotton and cotton-blend apparel at the nation's department stores later this year.
KEYWORDS: INFLATION by CNB