the BUSINESS SITUATION - Bureau of Economic Analysis

November 1965
PRICE rises so far this year have been
a bit larger than in the other years of the
current business expansion, which has
been noteworthy for its moderate price
advances. Despite the slightly larger
year-to-year advance, there has been
little evidence of a sustained acceleration
in price increases over the past few
quarters, as may be seen in chart 5.
In the first 9 months of 1965, the
Consumer Price Index averaged 1.5
percent above its level a year ago. In
the previous 4 years, the CPI increased
from 1 to 1.3 percent a year. Its
quarterly movements have been ir-
Overall Prices Continue to Increase
but Rise Is Still Moderate
1958 = 100 (ratio scale)
120
100
GNP Implicit Price Deflator
(seasonally adjusted)
Price Changes in 1965
CHART 5
80 I I I I I I I I I M I I M I M I I I I I I I M I I M I I I I I I I I I I M I M I I M
120
100
Mild upward trend in consumer prices persists
Consumer Price Index
"Wholesale Price fndex
80 I M I I I I I M I I I I I I I M ll I I I M I I I I 1 I I I I I I I I I M I I I I I I I I I
120
100
Industrial prices have edged up in the past year
80
1953
Wholesale Price Index, Industrial Commodities
ilmhiilnili
55 57
.huh
59
I I. M I M ll I II hi 1 I Ml
61 63 65
Data: QBE & BLS
U.S. Department of Commerce, Office of Business Economics 65-11-5
SURVEY OF CUEEENT BUSINESS
regularly upward in 1965, reflecting
mainly shifts in food prices.
Wholesale prices increased 1.7 percent
from the first 9 months of 1964 to
the first 9 months of 1965. The wholesale
index, which was quite stable from
about 1958 to the summer of 1964, has
risen for five consecutive quarters
since then; since June, changes on a
monthly basis have been very small.
The increase in wholesale prices in the
latter part of 1964 centered in industrial
commodities, which have continued to
rise this year. However, most of the
wholesale price advance in 1965 has been
attributable to sharply higher quotations
for farm products and processed
foods in the first half of the year.
Rise in industrial prices
The 1.5-percent rise over the past year
in wholesale prices of industrial commodities
is a development of some note
in view of the comparative stability in
these prices over a long period in which
demand has expanded considerably.
One aspect of the recent rise has been
that more commodities have shown
advances than in other years in the
current expansion. This may be seen
in the following table, which presents a
4-year summary of price changes for
the 73 subcategories of industrial products
surveyed by the Bureau of Labor
Statistics:
Sept. 1964-Sept. 1965
Sept. 1963-Sept. 1964
Sept. 1962-Sept. 1963
Sept. 1961-Sept. 1962
Increase
53
47
36
40
No
change
6
3
4
4
Decrease
14
23
33
29
A breakdown of industrial commodities
by stage of fabrication shows
that—over both the past year and the
past 6 months—industrial crude materials
have shown the largest price in-
crease and finished goods (on the average)
the least:
[Percent change]
Industrial crude materials..
Industrial intermediate
materials
Producer finished goods
Consumer finished goods,
durable ._
Consumer finished goods,
nondurable
Sept. 64-
Mar. 65
1.6
1 0
.9
-.2
1.2
Mar. 65-
Sept. 65
1.5
9
.4
-.2
.7
Sept. 64-
Sept. 65
3.2
1 9
1.2
-.4
Chart 6 illustrates price changes over
the past year for broad groups of commodities.
Prices of metals and metal
products have risen 3.2 percent since
FARM
PRODUCTS
Wholesale Prices
Percent Change
2 3
U.S. Department of Commerce, Office of Business Economics
1.9
CHART 6