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To: Kirk © who wrote (8957)	1/14/1999 10:37:00 AM
From: Jeffrey D	Respond to of 42834

Kirk/all, unless you are a smoker, still no signs of inflation. Jeff << Inflation Rate Is Just 1.6 Percent -------------------------------------------------------------------------------- Story Filed: Thursday, January 14, 1999 09:13 AM EST WASHINGTON (AP) -- Helped by a big drop in the cost of gasoline and other petroleum products, inflation rose just 1.6 percent in 1998, giving the country its best back-to-back annual performance on consumer prices since the mid-1960s. The Labor Department said today that its closely watched Consumer Price Index edged up just 0.1 percent in December, capping a year in which inflation was better behaved than the small 1.7 percent rise recorded in 1997. The small December increase reflected a record 18.3 percent surge in tobacco costs, reflecting a drive by tobacco companies to recoup the costs of their huge state liability settlements. Without the big jump in tobacco costs, there would have been no increase at all in prices in December. The modest increases in inflation over the past two years reflected the best two-year price performance in 34 years, since gains of just 1 percent in 1964 and 1.9 percent in 1965. The 1.6 percent rise last year was the best one-year showing since a 1.1 percent rise in 1986, a year in which energy prices plummeted by 19.7 percent. The recent good news on inflation in large part reflects the financial crises that began in Asia in 1997. Plunging currency values and deep recessions have sharply cut demand for many commodities, including energy products. This has been a boon for U.S. consumers, although American manufacturers are suffering a profit squeeze from the loss of export markets and the inability to raise prices domestically. Energy costs were down 8.8 percent for all of 1998, the biggest one-year decline since 1986. Energy prices had fallen 3.4 percent in 1997. The absence of price pressures in the United States gave the Federal Reserve the maneuvering room to cut interest rates three times in the fall in a so-far successful campaign to keep global financial problems from triggering a recession in the United States. Economist believe that inflation pressures will be slightly higher this year as Asian economies begin to recover and worldwide demand for energy products and other commodities picks up. However, analysts believe the slight rise will not be troubling for the Fed and they do not foresee a need for the central bank to start raising interest rates, especially if as expected, the U.S. economy slows in 1999. For all of 1998, food costs were up 2.3 percent, a slightly faster increase than the tiny 1.6 percent rise in 1997. Dairy products showed the sharpest acceleration in price gains last year while coffee prices actually fell 8.8 percent following a 16.9 percent surge in 1997. Excluding the volatile food and energy categories, the so-called core rate of inflation rose by 2.4 percent in 1998, only slightly faster than a 2.2 percent increase in 1997. This increase in the core rate reflected a sharp 31.8 percent jump in tobacco costs. Medical costs were up 3.4 percent in 1998, their biggest one year rise since 1995. For December, the core rate of inflation registered a 0.3 percent rise, following six straight months of 0.2 percent gains. But without the big increase in tobacco costs, the core inflation rate would have been up only 0.1 percent in December. >>

To: Kirk © who wrote (8957)	1/14/1999 10:57:00 AM
From: Jeffrey D	Respond to of 42834

Kirk/all, interesting chart showing inflation rates since 1985. What? No President Carter years included???? Jeff Inflation Rates Year-by-Year -------------------------------------------------------------------------------- Story Filed: Thursday, January 14, 1999 09:14 AM EST Yearly increases in the Labor Department's Consumer Price Index since 1985: 1998 1.6 percent 1997 1.7 percent 1996 3.3 percent 1995 2.5 percent 1994 2.7 percent 1993 2.7 percent 1992 2.9 percent 1991 3.1 percent 1990 6.1 percent 1989 4.6 percent 1988 4.4 percent 1987 4.4 percent 1986 1.1 percent 1985 3.8 percent