Producers expect subdued inflationMid-Atlantic...

BUSINESS DIGEST

July 19, 1994

Producers expect subdued inflation

Mid-Atlantic manufacturers expect prices of their finished goods to rise at a subdued 0.8 percent yearly rate in the second half of this year, the Federal Reserve Bank of Richmond said yesterday.

That's down from the 1 percent yearly inflation pace that producers expected in the survey last month, and represents a hefty reduction from the pace of inflation in 1993.

Nationwide, retail prices increased 2.7 percent last year, and rose at a 2.5 percent annual pace in the first half of this year. Producer prices rose at a 1.6 percent yearly rate in the first five months of 1994.

U.S. eyes sanctions against Japan

The United States is expected to initiate sanctions action against Japan this month, administration sources said yesterday, despite concerns that new trade friction could wreak further havoc on the dollar.

The sources stress that Tokyo still has time to make concessions in the public procurement dispute and avoid U.S. action at month's end.

But officials in Washington said they are not expecting any big breakthroughs and that financial markets should therefore brace for a new step-up in trans-Pacific tensions.

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