Up, Up, Up

It is now an established fact that inflation is spreading across the U.S. economy at the fastest rate in years. Since January, the prices consumers pay for goods and services have shot up at a 3 1/2-a-year pace. Last week the Labor Department reported that consumer prices rose .4% in July--the sixth monthly gain in a row. This lifted the nation's consumer price index to a record 113.3, or 13.3% above the base average of the years 1957-59. On top of that, wholesale prices--which normally foreshadow the future course of consumer prices--gained .7% in July after four months of relative stability.

Across the Board. That cost-of-living squeeze last week moved President Johnson to exhort business and labor to keep prices and wage boosts within "reasonable bounds," lest the Government feel forced "to take other measures." What these measures might be, Johnson did not say, though higher taxes (after the November elections) are the most obvious possibility. The President also ordered Health, Education and Welfare Department Secretary John W. Gardner to investigate spiraling medical costs, which have jumped 3.4% in just six months. The cost of hospital care has been going up swiftly, and now stands at 164% of its 1957-59 level.

Chief ingredients of the latest advance were food, up .4%, transportation, up 1.2% because of New York City's 50 subway-fare increase plus higher prices for used cars, gasoline, tires, auto repairs and insurance. Prices also jumped for a broad range of other products--from cigarettes to furniture, textiles, paper napkins and detergents. Over the past twelve months, the cost of consumer services, from baby sitters to manicurists, has risen 4.1%. The cost of homeownership is up 4.5%, dairy products 6.4%, shoes 7%, picnic meats 12%, cucumbers 29%.

Demand for paperboard boxes is so strong that producers are amidst their third round in a year of price increases, averaging about 5%. International Harvester quietly raised prices on heavy-duty trucks by an average 2.7% two weeks ago. Last week Owens-Illinois, Inc. raised fall prices by 3% on 60% of its glass containers, which package such things as food, drugs, toiletries and soft drinks. Even the Government joined the trend, as the General Services Administration upped the sales price of stockpiled tin from $1.52 1/2 to $1.54 per Ib.

More to Come. Even so, official figures do not yet reflect some of the biggest recent price hikes, notably the early August 2.3% boost in sheet-steel prices, which promises to push up the price tags on everything from nails to new autos this fall. And there is much more to come. Cement makers have boosted prices by 10-c- to 20-c- per bbl. in several areas, effective in November or January. On Sept. 1, Detroit's unionized barbers will increase men's hair cuts from $2.25 to $2.50. Incensed by that "annual holdup," the Detroit News only half-jokingly urged men to wear their hair long as "a badge of courage in the face of inflationary pressures."

With unemployment at a low 3.9% and factories straining at 93% of capacity, neither business nor labor shows much sign of adopting self-restraint while Washington continues to stoke inflation by spending money it doesn't have. "Industry has no choice other than to pass along higher costs, of which labor is responsible for the lion's share," says President Charles C. Gates Jr. of Denver's Gates Rubber Co.

A.F.L.-C.I.O. Boss George Meany last week demanded much bigger pay raises for labor, and went so far as to blame rising prices on soaring business profits. He thereby ignored the fact that the average manufacturer's profit margin per dollar of sales is right where it was a year ago, at 6.8%.

Among economists, the air is now full of I told you so's. Says Neil Jacoby, dean of U.C.L.A.'s Graduate School of Business Administration and a former member of the President's Council of Economic Advisers: "A year ago, many of us foresaw price inflation of 4% or 5% over the year, which is what we have. We predicted that the guideposts would fail--and they have. We recommended that the Government postpone some Great Society spending until the Viet Nam war is settled. The President rejected all our proposals. Inflation will continue so long as the Government operates with a deficit budget. I see no end to it." The end is indeed hard to see.

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