Consumer prices up a scant 0.1% in May Weekly earnings, auto sales soar

June 16, 1993|By New York Times News Service

WASHINGTON -- All but burying fears of worrisome inflation, consumer prices inched up one-tenth of 1 percent in May as lower prices for gasoline and clothing offset increases for vegetables, used cars and the fees charged by physicians and lawyers, Labor Department figures showed yesterday.

The report, combined with a similar one on Friday showing no inflation at the producer level, was widely seen as proving that prices remained in check and that jumps earlier this year were temporary and in some cases more statistical than real.

Short-term interest rates posted further declines as investors and traders seemed to rule out the possibility that the inflation-wary Federal Reserve would act to tighten monetary policy any time soon.

President Clinton, who has tended to let aides do the commenting on economic figures, hailed the day's report at a White House news briefing at which he once again promoted his budget proposals.

"The continuation of this trend depends on our ability to pass a strong economic program through the Congress which reduces the deficits, increases investment in our future and is fair," the president said.

In related figures released yesterday, the Labor Department reported that average weekly earnings soared 1.6 percent last month, the biggest advance since early 1982. Analysts cautioned, however, that this did not imply a sustained pickup in the fortunes of American workers since most of the gain merely reflected longer hours.

Over the past 12 months, the report also showed, weekly earnings climbed 3.6 percent but after adjusting for an inflation rate of 3.1 percent the real gain was a skimpy five-tenths of 1 percent.

Another sign of a strengthening economy came from automakers, who said the sales recovery that began in April appeared to be continuing, as sales of domestically built vehicles rose 15.5 percent in early June.

Sales of cars built in North America rose 8.8 percent, to 203,304, from June 1 and June 10 compared with the similar period last year.

Sales of light trucks, which include minivans, pickups and sport-utility vehicles, rose 25.4 percent, to 157,156.

Overall, vehicle sales totaled 360,460.

The report on the Consumer Price Index was seen as clinching the argument that the April jump of four-tenths of 1 percent was not sustainable in an economy in which companies seem to be doing everything possible to hold down wages and other costs and have been unwilling to risk losing customers by sharply raising prices.

The "core" inflation rate, which excludes the wide-swinging food and energy components, subsided last month to a rise of two-tenths of 1 percent, half the April advance and much less than the rises of five-tenths of 1 percent that caused such consternation in January and February.

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