Wholesale Prices Up 1.8% in ’84 : December Increase Is 0.1%; Analysts Optimistic on ’85

Wholesale prices rose a scant 0.1% in December, winding up 1984 with a low 1.8% increase in the price of finished goods for the year, the Labor Department said Friday.

That record, following an even smaller 0.6% wholesale price increase during 1983, led several economists to predict for 1985 a third consecutive year of economic recovery with low inflation--a record unknown for two decades. The combined 2.4-percentage-point increase in producer prices for 1983 and 1984 was the lowest since 1963-64, when the increase was 0.3 percentage points.

Energy Costs Off Sharply

December’s statistics, consistent with those for 1984 overall, were marked by sharply falling energy and commodity costs, caused primarily by a decline in world oil prices; generally stable food prices and only minimal increases in the costs of manufactured goods.

White House spokesman Larry Speakes applauded the results as a “20-year record which demonstrates the President’s success in maintaining steady economic growth with low inflation.” Moreover, he asserted, the persistently low level of wholesale prices--which can indicate broad trends at the retail level--should “translate into consumer cost stability as we enter 1985.”

Several private-sector economists said they agreed with Speakes’ assessment. “There are no signs of problems on the inflation front,” Allen Sinai, chief economist for Shearson Lehman/American Express, said, adding that “1985 should produce another good year for prices.”

2% Price Rise in ’85 Seen

Sinai, who, along with many economists, now discounts fears that the economic slowdown of late 1984 will lead to a recession this year, forecasts wholesale price increases of slightly more than 2% in 1985. But, he said, energy costs in particular will continue to fall.

“We’ll have a continued expansion . . . for at least the next year,” said Tom Lieser, vice president and economist at Security Pacific National Bank in Los Angeles, which is forecasting growth of 3.5% in the nation’s output of goods and services for 1985.

The economic expansion is beginning its third year and the outlook is promising, Lieser said.

“Price pressures are very slight,” he declared, noting that as wholesale prices rose just 1.8%, total economic output grew at a healthy 6.7% pace. The current inflation rate “is not much of a threat to the stability of the economy,” he said.

Overall energy prices fell 4.1% during 1984, the Labor Department reported, while prices of finished energy goods--that is, refined products such as gasoline and home heating oil and natural gas--declined 1.3% on a seasonally adjusted basis in December. The price of raw materials also dropped, with commodities other than energy and raw foodstuffs falling 3.3% during the year.

For December, food prices rose 0.5%, still lower than a 0.7% gain in November. And, for the year, food costs were up 3.8%, compared to 2.3% in 1983. New car prices, meanwhile, increased only 0.5% last month and 0.6% for all of 1984.

But Jerry J. Jasinowski, chief economist for the National Assn. of Manufacturers, called energy and commodity prices key elements in the low inflation now under way.

“There has been considerable softness in commodity and energy prices worldwide, while the slowdown in the economy in the second half of 1984 reduced demand pressure on prices,” Jasinowski said in a statement. “In early 1985, producer prices should also be sluggish due to some runoff in inventories and falling energy costs.”

Donald H. Straszheim, chief domestic economist at Wharton Econometrics in Philadelphia, cited several other factors as well in the course of an optimistic forecast for inflation. These include a continued slowdown in wage increases, combined with gradually rising labor productivity; adequate supplies of manufactured goods and a strong influx of foreign goods that will pressure domestic producers to keep prices low.

The “bottom line,” Straszheim said, is that “we can’t find any symptoms of an upward move in inflation. I don’t believe a single important component of inflation will move up as much as 5% during 1985.”

And, he added: “Three years ago, it would have been difficult to find an economist who thought any component of inflation would move up less than 5% in a year.”