Inflation: let's not kid ourselves

THE news on inflation in the United States is good - relatively speaking, with emphasis on ``relatively.'' The 0.3 percent increase in September's consumer price index, announced Friday, translates into an annual rate of 4.1 percent - enough to spark a 4 percent rise in social security benefits come January. This is lower than in the past few months, and economists are hopeful that a lower rate will prevail through the end of the year. The inflationary surge that many feared over the past few months, particularly as joblessness kept falling, has not materialized. But let's not kid ourselves that this is not inflation.

By continuing to tighten the money supply, the Federal Reserve keeps fighting the good fight, more or less unaided by any of the other powers in Washington. Economists find it unhelpful when administration spokesmen speak of ``another month of noninflationary growth.''

This is certainly not the double-digit inflation of a decade ago, which etched itself on the memory of consumers. What the country is experiencing now is a level of price increases not high enough either to discourage buying, or to encourage binge-buying now in anticipation of rising prices later, as happened so often in the bad old double-digit days.

Corporations have been able to fatten their profits by taking advantage of consumers' nonchalance about modest price hikes. Increases in food prices on account of summer's drought were a big part of the September increases. But even over the summer, before the drought could have any real effects on food prices, supermarkets raised prices, and consumers kept buying.

It is often easy to dismiss a price increase by saying, ``Well, my salary went up, too, this year.'' But in fact, wages are not quite keeping up with inflation, even though the low unemployment rates of the past few months had led economists to expect upward pressure on wages - which was to have been a factor in the inflationary surge that didn't surge.

There are far worse economic evils than 4.1 percent annual inflation. Let's just remember it's moderate inflation, not ``no inflation.''