Prices and Wages in the Recession

Archive Report

Inflation in the Midst of Recession

Anomaly of Rising Prices in Business Slump

Advance of the Consumer Price Index1 to another record high in April—eighth month of the worst recession since the 1930s—pointed up once more the puzzling anomaly of steadily rising prices in a period of sharply reduced business activity. A recession results from inadequate demand for the supply of goods and services which the country can provide with its labor force fully employed. Consequently, it might be expected that producers, conforming to the fundamental economic law of supply and demand, would have long since lowered prices to stimulate purchasing. On the contrary, consumer prices as reflected in the C.P.I. have been climbing from one new monthly peak to another.

The present round of price inflation, ...

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