Inflation Last Year the Lowest Since 1986 : Economy: Consumer prices rose just 2.9% in 1992. Meanwhile, the trade deficit jumped 5.5% in November, but analysts aren't worried.

Inflation Last Year the Lowest Since 1986 : Economy: Consumer prices rose just 2.9% in 1992. Meanwhile, the trade deficit jumped 5.5% in November, but analysts aren’t worried.

By KAREN LOEW

Jan. 16, 1993 12 AM PT

TIMES STAFF WRITER

WASHINGTON —

Inflation finished the year at its lowest level since 1986, as consumer prices rose a mere 2.9% in 1992, the government reported Friday.

The Labor Department said the consumer price index rose only 0.1% in December as declining clothing and transportation costs largely offset price increases for food, housing, medical care and entertainment.

The CPI is a monthly measure of the average change in prices over time of a fixed market basket of goods and services.

The annual inflation rate marks a decrease of 0.2% from the 1991 rate of 3.1%.

Not since the mid-1960s has inflation been so low for two years straight. Many economists predict that the rate will remain low through this year, then rise again in 1994 and 1995.

In Southern California, consumer prices rose 3.6% for the entire year, the Labor Department reported.

Meanwhile, the Commerce Department said Friday that the U.S. trade deficit jumped 5.5% in November, to $7.6 billion from $7.2 billion in October, reflecting the effect of deepening recessions in Japan and Europe on the overseas purchases of U.S. goods. U.S. exports fell in all areas except automobiles.

But economists said they do not believe that the drop in exports is enough to derail the U.S. recovery.

“Exports will be weak to the major basins--Europe and Japan--but strong to Mexico and Canada and the rest of Asia,” said Roger Brinner, executive director of the Lexington, Mass., business consulting firm DRI/McGraw-Hill. “The newly industrialized world needs industrial equipment and fancy goods--services they just can’t provide for themselves.

“You can be really certain that import decline is an aberration,” Brinner said.

U.S. exports totaled $38 billion in November, down from $39.1 billion in October, the Commerce Department said, while imports were $45.6 billion, compared to $46.3 billion the previous month.

With America’s 1992 trade deficit reaching $75.6 billion with a month’s transactions yet to be tallied, the 1991 deficit of $65.4 billion has already been surpassed. It will be the first year since 1987 that the United States failed to improve its trade imbalance.

Additionally, the Federal Reserve said U.S. industrial productivity rose 0.3% in December, operating at 79.3% of capacity. The figures show business output at its highest level since November, 1991, bolstered largely by an 8.7% jump in automobile production.

The monthly sales by manufacturers, retailers and merchant wholesalers also rose in December, the Commerce Department said in another report. The combined value of sales and shipments was estimated at $563.7 billion last month, topping November’s total by 4.3%.