Living Costs: Higher

The cost of living hit an alltime high in mid-June. On the basis of the new BLS index, it reached 114.5 of the 1947-49 average (.2% more than the previous high recorded last August*), chiefly because of a 1.4 increase in food prices. For 100,000 workers in aircraft and glass plants, the March to June rise means a wage boost of i-c- to 2-c- an hour.

All signs indicated that the index will rise some more, despite the Korean truce. Any cuts in defense spending were expected to be slight and gradual, and defense officials estimated that only about $1 billion might be trimmed from the current fiscal year's arms spending. Commodity prices, which hit a low point six weeks ago, have bounced up, indicating higher retail prices ahead. Meat prices have steadily climbed. At Chicago, the wholesale price of cattle has gone up 25%, the price of hogs has also increased. But the biggest increase will come in rents, following the dropping of federal controls this week on 4,200,000 rental units.

In such cities as Chicago, San Francisco, Cleveland, Pittsburgh, Minneapolis and St. Louis, which have no local rent control laws, most landlords were planning to raise rents a minimum of 10% to 15%. On lower-priced apartments, increases might run as high as 80%. Many cities set up Fair Rent Committees,' which will try to mediate disputes between landlords and tenants, but without real enforcement powers. Fearful that rent gouging would provoke enactment of local rent-control laws, the bigger real estate men announced that they would hold increases down to 10 or 15%, pleaded with other landlords to do likewise.

The upsurge in prices caused many an expert who had been loudly predicting a falling off in business and sharp drop in prices later this year to take another look at his tea leaves. Now the leaves seemed to say that the expected recession--as it has been for eight years--would be "some time next year."

*But on the basis of the old index, which was abandoned this week, since the new one has become generally accepted, the July 1952 record of 192.4 of the 1935-39 average still stands, though the old index has also edged up to 190.9. It does not include such items as transportation, medical care and recreation which are in the new index.

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