Inflation Watch

The Administration's inflation fighters have shown about as much enthusiasm for the freeze as they might for a visit to the dentist. Their main concern now is how quickly they can end it. For some firms it may be over within the next few weeks. John Dunlop, the Cost of Living Council chief, said last week that he was considering lifting the freeze on "a phased basis." A number of firms and industries for which new rules can be quickly drafted could be relieved of the freeze well before Aug. 12, when the more flexible controls of Phase IV are scheduled to take effect. Other developments last week:

MONEY: Hoping to slow down the economy and restrain inflation, the Federal Reserve Board made credit costlier and tighter. The Fed raised the discount rate by 1/2%, to 7%--equaling the alltime high set in 1921. It also raised bank reserve requirements, which will make credit harder to get. These moves will certainly send up short-term interest rates. Banks will probably increase their prime lending rate to businessmen by 1/4%, to a very steep 8%. The Fed acted in part because credit demand has been so great that the nation's money supply expanded at a dangerously high annual rate of 9.3% in the second quarter of this year.

PRICES: The Cost of Living Council ordered 1,100 gasoline stations to roll back their prices after they were found to be violating the freeze and overcharging their customers by an average of 2-c- a gallon. The Internal Revenue agents who have to seek out violators face a monumental task: there are 220,000 service stations in the nation. WAGES: Inflation galloped ahead of wage increases in May, the Bureau of Labor Statistics reported. Though average wages increased by .3% in the month before the freeze, consumer prices jumped by .6%.

CONSUMERS: Price rises have caused the public's confidence in the soundness of the economy to decline to a 30-month low, according to the University of Michigan's latest consumer-attitude survey. Based on a study that university researchers made between late April and late May, the consumer-confidence index dropped to a mark of 76, down from 80.8 in the first quarter and 90.8 at the end of last year.

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