December Wholesale Prices Up .1% : ’84 Rate of 1.8% Helps Set Best 2-Year Mark in Last Two Decades

Prices at the wholesale level edged up a scant 0.1% in December, giving all of 1984 an inflation rate for wholesale goods of only 1.8%, the Labor Department said today.

The 1.8% rate is only half of what the inflation rate for consumer prices is expected to be for 1984.

The price dealers paid for heating oil, gasoline and natural gas fell for the month and moderate increases in the price of pork and beef kept food prices to a 0.5% increase in December.

“You can’t complain about 1.8%,” a department economist said. “We’re doing better than the consumer price index.”

Consumer prices for December will not be measured for another 12 days, but they are expected to show an inflation rate for all of 1984 of 4% or less, moderate but still reflecting more price acceleration at the retail level than for wholesale merchandise.

‘Consumer Cost Stability’

White House spokesman Larry Speakes said today’s figures “should translate into consumer cost stability as we enter 1985.”

He said wholesale prices for the last two years were the lowest in any two-year period in two decades and “demonstrate the President’s success in maintaining steady, economic growth with low inflation. . . . It’s real good news.”

The government’s report weighs price increases for nearly 3,400 categories of goods that businesses sell each other. The wholesale price, reflecting the cost of goods bought in large quantities, does not directly change consumer prices, but the trends do carry through to cash registers.

The wholesale inflation rate for all of 1983 was even better than 1984, at only 0.6%. But some broad categories of wholesale prices, such as raw materials, actually showed less of an increase last year than in 1983.

Wholesale prices rose 0.5% in November, the second largest monthly surge of 1984, after dropping or standing still in six of the previous seven months. But now wholesale prices are settling down again without any negative trends on the horizon that could spoil the picture anytime soon, analysts say.

Energy prices are expected to stay much the same or even fall further after declining 4.1% in all of 1984. That was exactly half the rate of decline in 1983 but nevertheless quite substantial.

Drop in Energy Costs

Heating oil costs dropped 2.9% in December. Gasoline was down 1.2% and natural gas also fell for the fourth month in a row, by 0.5%, reversing the typical winter trend of increases.

Among foodstuffs, beef rose only 1.4%, a significant slowdown from November’s huge 7.5% gain. Pork was 3.4% higher, also less of a rise than the month before.

Vegetables were 5% cheaper but fish was 5.1% more expensive.

“We will probably get no significant acceleration in finished goods prices at least in the early part of this year,” economist Donald Ratajczak of Georgia State University said.

“The strong dollar is probably as important as anything else to holding inflation down again.”

Passenger car prices rose 0.5% in December, slightly more than November’s 0.4%. Auto prices had dropped 1.2% in October.

Prescription drug prices paid by pharmacies were down 0.7%.