Prices Outpace the U.S.

An American fleeing from high living costs can no longer escape by catching a jet to Europe. He will find prices rising there quite as rapidly as in the U.S., or even faster. In this age of supposed European unity, cynics say, galloping inflation is the one thing that all Europeans really do have in common. By year's end, Europeans could be paying close to 10% more for food, clothing, shelter and other everyday needs than they did in 1972.

In Italy, Ireland, Portugal and Spain living costs threaten to soar as high as 12% or even 15% this year. Switzerland is bracing for 8.4% inflation this year, and West Germany will be happy to get away with 8%. To help stem a flood of inflation-feeding foreign currency into Germany, the government last week revalued the Deutsche Mark upward by 5 1/2% against other Common Market monies, jeopardizing the prospects for European monetary union.

As in the U.S., the steepest and most painful increases are coming in food. Britons are paying 30% more for fish and pork, and 40% more for "cheap" chuck steak. Former Prime Minister Harold Wilson recently told a Labor Party meeting that his wife Mary was "almost in tears" as she watched "a little old lady moving from one part of a shop to the other, pricing all the things she wanted." The woman finally walked out "clutching a pathetic little plastic package of two slices of meat loaf."

Most nonfood prices are zooming too. As many as 50% of the families in some suburbs around Stockholm have had to seek special state aid to pay leaping rents. Auto traffic in Barcelona and Madrid now thins noticeably during the last week of each month, because until the next monthly paycheck arrives many Spanish motorists are too broke to buy gasoline at 52-c- a gallon, up 25% in two years.

Though the price rises have squeezed people living on pensions or subsisting in marginal jobs, European incomes generally are still rising faster than living costs. Consequently, several European governments are talking a stern fight against inflation, but their actions have usually shown more caution than vigor. In Switzerland, for example, a so-called price czar empowered to order rollbacks has acted just once since his appointment in January.

To be sure, some of the causes of inflation seem almost beyond government control. European refiners have had to swallow a 17% rise in the cost of Mid dle Eastern and North African oil in the past six months, and some textile mills are paying 40% to 50% more for cotton and wool, partly because purchases by the all-consuming Japanese have shrunk supply. The most volatile commodity of all is the $80 billion in Eurodollars, spilled out of the U.S. by past excessive American spending, that ricochets from country to country, feed ing inflation by swelling the available money supply.

Pump-Priming. Yet European inflation also has internal causes that have not been countered. Few countries have resisted the temptation to buy industrial expansion and create jobs by enlarging the supply of money and credit. Last year the Common Market countries in creased their money supplies by 12% to 24%, compared with 8% in the U.S.

Last week finance ministers of the Common Market countries agreed to reduce money-supply growth, curb credit, en courage savings by paying higher inter est rates and shrink budget deficits. But even if these resolves are kept, the inflationary effects of earlier pump-priming will ripple through their economies for months to come.

Labor unions and farmers seeking inflationary increases in incomes also wield inordinate power. In Madrid, lobbyists for Spain's farmers descended on President Luis Carrero Blanco's new administration to petition for astonishing price rises, ranging from 20% for eggs and pork to 50% for chicken. Their argument was simply that "we are living in a period of inflation." The government has not yet acted on the demand.

Only the British government has dared to take the political risks of putting on severe wage-price controls.

Price rises are making a hash of the Common Market's forward planning.

The EEC Commission recently warned of "grave danger" to European economic and monetary union, targeted for 1980, unless runaway prices, wages and growth in the money supply are checked. But The Netherlands' Jelle Zijlstra, chairman of the Bank for International Settlements, laments that "the power of particular groups and interests to push incomes and prices up has exceeded the power of governments and central banks to stop them from doing so. There is no particular reason why the process should not continue.

That is what is really alarming."

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