Food Up, Refrigerators Down

For the fifth month in a row, the consumer price index rose to a new high in June, the Labor Department announced last week. It was only a tiny rise (.02%), but what cost $1 back in 1947-49 now costs $1.26 1/2. The department bases its index on about 300 items--food, clothing, durable goods, services--but it was primarily the higher cost of food that sent the index up. Prices have crept up 1.6% in the past year, while the gross national product has shot up much more. In the second quarter of 1960, according to new figures last week, the U.S. economy produced goods and services at an annual rate of $505 billion, well above a year ago (see chart).

One reason why the price index has remained fairly stable in recent months is increasing competition in many industries. In the heavy appliance business in June, sales to dealers ran 12% behind last year, and as inventories pile up, prices are falling. Frigidaire last week cut prices on its line of refrigerators from 5% to 12%. General Electric dealers have also cut prices $10 to $30 on some models. Other major makers are expected to follow. Another soft spot is furniture. Dealers are also downpricing standard-size cars because of high production, heavy inventories and competition from the smaller and lower-priced compacts.

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