‘88 Consumer Prices Up 4.4%; Drought Cited

Consumer prices rose 4.4% in 1988, the same as a year earlier, as hefty, drought-induced increases for groceries offset stable energy prices, the government said today.

However, many economists worry that the country may be in for a taste of the bad old days this year. They say tight labor markets and rising factory operating rates will inevitably lead to higher costs for consumers.

Last year’s 4.4% gain in the Labor Department’s consumer price index matched the 1987 increase, which was the highest since 1981 but was four times the 1.1% rate in 1986, a 25-year low.

A 0.3% rise in the index in December, which followed a 0.3% November increase, helped inflation finish the year at a moderate pace.

The summer drought, which shriveled crops and seared pastures, pushed food prices for the year up 5.2%, the steepest rise since 1980.

Energy for the year rose only a slight 0.5% after an 8.2% jump in 1987. Still, energy prices were far below levels before the 1986 oil glut, which pushed energy prices down 19.7%.

The cost of medical care, up 6.9%, also rose faster than the general inflation rate last year.

Tobacco prices posted one of the steepest rises of any sub-category, up 9.4% for the year.

Clothing prices rose 4.8% overall, with men’s and boys’ apparel up 6% and women’s and girls’ clothing up 3.4%.