Why continued success is likely in effort to tame inflation

The once-wild beast of inflation is becoming more and more domestic. The Consumer Price Index continues to crawl upwards at a slow pace. Energy and food prices are weak. Productivity is improving, and wage increases remain moderate. And the dramatic disarray in OPEC, say economists, helps ensure that inflation will stay tamed at least into 1984.

''This really is a significant moment,'' chortles David Jones, chief economist of the Wall Street bond firm Aubrey Lanston & Co. ''It now looks as if we can have our cake and eat it too - get a solid economic recovery, while inflation continues to decline.''

This past January, the inflation rate rose only 0.2 percent, the Bureau of Labor Statistics announced Friday. At that pace, inflation would total 2.1 percent for 1983 - even less than 1982's 3.9 percent.

It's unlikely that January's low inflation rate will be sustained throughout the year. As American Enterprise Institute economist Rudolph Penner notes, ''the month to month figures are pretty random.''

And January's CPI figures, for the first time, reflect a new ''rental equivalence'' used to compute home ownership costs. The new method will reduce weight given to home ownership costs and make the CPI less sensitive to changes in mortgage rates.

But economists predict inflation will remain in the low-to-middle digit range for at least a year. Mr. Jones says the basic US inflation rate is now around 6 percent; Dr. Barry Bosworth, director of President Carter's Council on Wage and Price Stability, says he believes we'll see inflation staying below 5 percent on a sustained basis.

This easing of price pressures would be consistent with the economy's post-World War II performance. The inflation rate typically continues to unwind for some months after a recession has ended.

The Consumer Price Index, however, has already fallen below the low point it reached after the last severe US recession.

It's the recession, of course, that has sapped much of inflation's vitality. With fewer people buying and many factories operating far short of capacity, retailers and manufacturers have powerful incentives to keep prices from rising.

''Demand pressure won't be a factor for years to come, because this recession has been so severe,'' says Mr. Bosworth.

With 12 million workers unemployed, wage increases have been very modest, and continue to decelerate, he adds. Average hourly earnings rose less than 6 percent last year - the smallest increase since 1968.

Another drag chute slowing down inflation is continued improvement in productivity, the measure of how much each worker produces. As workers become more productive, they improve manufacturers unit labor costs - and US productivity growth in 1982 was over 2 percent, its best performance since 1975.

Finally, falling oil prices are a highly visible factor in the improving inflation outlook. Gas and fuel oil prices dropped over 3 percent in January, holding the Consumer Price Index to its slight increase. By the end of 1983, falling oil prices could directly reduce the inflation rate between one-half and one percentage points, estimates Morgan Guaranty Trust.

In that context, last week's crumbling of OPEC's united front is a dramatic symbol of slowing inflation - one Wall Street views with a touch of jubilation.

If market forces become dominant on oil prices, says Jones, inflationary expectations - those vague fears of financiers and money managers, which have an undetermined effect on inflation itself - will be sharply eroded.

But those expectations of inflation haven't disappeared.

''If inflation fears had been tamed, we would not see long-term interest rates where they are today. Mortgage rates wouldn't be around 12 percent,'' says Dr. Robert Genetski, chief economist of Harris Bank.

Financial markets, pointed out Secretary of the Treasury Donald Regan Sunday on ABC, are still very aware of projected federal deficits, and fear the red ink may contribute to a resurgence of inflation sometime next year.