Inflation outlook worse

Press, 27 January 1979, Page 8

Inflation outlook worse

i NZPA-Reuter Washington | President Jimmy Carter (issued a fresh warning yesterday on the dangers of inflation and was promptly confronted with assessments that the situation may be worse than he thinks. The President told Congress in his annual economic message that if it were not checked, then “finally, the corrosive effects Of inflation 'eat dway the ties that bind us together as a people.” At the same time, he restated the Administration’s earlier estimates that the 9 per cent inflation rate would slow to 7.4 per cent this! year. But in testimony' to the ■House of Representatives Budget sub-committee, the (Federal Reserve Board chair(man (Mr William Miller)

iisaid he felt the best the (nation could hope for was to r | trim three-quarters of a per>!centage point from inflation f annually. ■ The Congressional Budget s Office said the Adminis--3 tration’s inflation estimate was at the optimistic end of - their projection that prices : could rise as rapidly as 9 tjper cent this year. ’ I The Budget Office also i! said that economic growth I ( would probably be lower than the Administration pro- ■ jects. Economic activity > could be flat next y ear with ‘ a temporary, small downl turn. ' The office estimates that President Carter’s 1980 Budi get, submitted to Congress ‘ on Monday, would actually : produce a SUS4O.6 billion deficit rather than the SUS 29 billion deficit Mr

: Carter has projected. Mr i Carter has also said that growth will slow and unemployment will climb. Mr Carter has made reducing the deficit a key element of his anti-inflation strategy. Another sobering note was! struck by Barry Bosworth.; chairman of the Wage and; Price Stability Council. “For at least the next six! months, we’re going to have! very large and substantial; increases in food prices.; with little that can be done! about it,” he said in a speech. Beef supplies were short, j and harsh winter weather in several sections of the! nation meant “there is going j to be another major short- ( age of fruit and vegetables,”; 'he said.