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May 1992, Vol. 115, No. 5
Kenneth J. Stewart
T he Consumer Price Index for All Urban Consumers (CPI-U) increased 3.1 percent in 1991, following a 6.1-percent advance in 1990.1 The 1991 price rise was the lowest annual rate of increase since a 1.1-percent advance was posted in 1986, and the second smallest since 1967. Sluggish economic conditions tended to dampen inflation, but developments for energy and food were major factors in the general slowing of consumer price increases.
The sluggish economy reduced inflationary pressure on consumer prices during 1991, as the recession that officially began in July 1990 continued. On an annual basis, real gross domestic product remained relatively flat in both 1990 and 1991. The civilian unemployment rate, which rose from 6.1 percent in December 1990 to 7.1 percent in December 1991, has generally been increasing since the recession began. And although consumer confidence, as measured by the Conference Board, turned up briefly in first-quarter 1991 following the outcome of the war in the Persian Gulf, it declined later in the year.
The cost of labor and materials also moderated in 1991. Total labor compensation costs paid by U. S. employers (which include wages, salaries, and benefits paid to employees in private industry and State and local government) increased 4.3 percent in 1991 after advancing 4.9 percent in 1990. The Producer Price Index for finished consumer goods excluding energy rose 1.6 percent in 1991, its smallest annual increase since 1987. As a result, the CPI for commodities rose only 1.2 percent in 1991, the smallest rise in 5 years.
This excerpt is from an article published in the May 1992 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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1 Annual percent changes are December-to-December changes.
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