Why Inflation May Stay Bottled Up For The New Year

Get set for some relief on the inflation front. Economist Donald Ratajczak of Georgia State University predicts that the producer price index for finished goods for December will post a 0.1% decline--after rising 0.5% in November and hitting a double-digit annual pace in the prior three months. Behind the decline are sharp drops in fuel oil and gasoline prices and the impact of the recession on consumer goods and industrial goods. Looking ahead, Ratajczak expects energy prices to trend down in 1991, helping to limit the rise in the PPI for finished goods to just 0.5% between December, 1990, and December, 1991, compared with a 6.2% increase in the previous 12 months.

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