Inflation report expected to be worst since 1981

The week ahead

January 14, 1991|By Chicago Tribune

Uncertainty is the watchword this week, as the Middle East and the lackluster state of the economy dominate the attention of those who buy and sell the nation's assets. With those anxieties in the forefront, inflation has taken a back seat. But Wednesday marks the day the nation learns the pace of consumer inflation for December, as well as the full-year rate for 1990. It is likely to have been the worst year for price runups since 1981, when inflation was 8.9 percent. Most analysts are expecting the price rise for 1990 to be somewhere around 6 percent, even if the December figure shows a small drop.

FORECAST: December's increase in consumer prices to be a modest 0.2 percent. With that tiny increase for the year's final month, the consumer price index for 1990 likely will show a final increase of 6.1 percent.

AFTERTHOUGHT: The slowing pace of inflation and economic activity indicates that the Federal Reserve soon will allow interest rates to fall further, says Marshall Front, executive vice president of Stein Roe & Farnham Inc. of Chicago. "It's inevitable that we'll see another half-point reduction in the discount rate," says Front, noting that the federal funds rate, at which banks lend to each other, is 6.75 percent, only a quarter-point above the discount rate. Typically, the Fed looks for a wider spread between those figures.

NEXT UP: The Commerce Department reports tomorrow on retail sales for December. Also Tuesday, carmakers report sales for the first 10 days of the new year.

MORE EVENTS: The Federal Reserve Wednesday reports industrial production and capacity use for December, as well as business inventories for November.

DEADLINE: American Telephone & Telegraph Co. is to disclose this week how much stock was tendered under its hostile $90-a-share offer for NCR Corp.

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