The Persistent Ogre

Some Nixon Administration economists have been having unusual trouble with their wives lately. The economists insist that figures show the pace of inflation to be slackening, but the wives reply that their weekly bills at the supermarket show no such thing. Last week the wives' viewpoint won a round. The Government announced that the consumer price index in July showed its most rapid rise since February, mostly because of that persistent ogre, climbing food costs.

The increase for all prices averaged 4.8% at an annual rate, with food accounting for almost two-thirds of the jump. Prices for fresh fruits and vegetables, which are not subject to controls, went up instead of declining as they usually do at this time of year. The index for meat, fish and poultry climbed even more. These prices have now risen 10.1% in the year since President Nixon proclaimed his temporary price freeze. As if things were not bad enough on the food front, the American Bakers Association reported that bread prices might rise 2-c- to 3-c- a loaf because of a shrinking supply of flour, caused by wheat sales to Russia.

Government officials took a little cheer from a recent decline in quotes for cattle on the hoof, which they say promises lower retail prices for steak and hamburger by September. But beef on the hoof could well rise again soon after that, pushing prices at the supermarket counters up further by Thanksgiving. Many ranchers who rushed their cattle to feed lots prematurely because of high prices and a drought that dried up grazing land are now rebuilding their herds. Such expansion initially reduces cattle supplies and drives up prices because heifers, which make up half of the calf crop, are held back for breeding purposes.

One month's up-tick in the price index, of course, means no more intrinsically than one month's downturn did in the years when inflation was steadily accelerating. Yet the July performance was disquieting, both because of the Nixon Administration's seeming inability to stop food prices from soaring and because some other prices caused trouble too. Interest rates on mortgages, premiums on insurance, transportation costs, and prices for housing, used cars, carpets, gasoline and liquor all advanced faster than usual, or failed to show normal seasonal declines.

The Administration has made only gestures toward controlling food prices more effectively. For example, it froze coffee prices at the factory level two weeks ago. Its major anti-inflation effort of the summer has been the White House campaign to jawbone automakers into withdrawing proposed price increases ranging upward from $90 a vehicle. Last week the Cost of Living Council, which has been prodding the companies to shave their proposed increases, evidently decided to settle for a partial victory. It remained silent and thus tacitly accepted offers from General Motors and Ford to reduce the increase to $59 per car or truck. The requests now go to the Price Commission, which is almost certain to grant them--though only after public hearings that will hold up the boosts until a month or so after the new models go on sale.

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