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Consumer Prices Rise 0.2 Percent

September 17, 1998

WASHINGTON (AP) _ Inflation stayed under control in July, helped in part by falling prices for energy, produce and telephone service.

The Labor Department said today that its Consumer Price Index rose a seasonally adjusted 0.2 percent in August, the same as in July.

Despite labor shortages that have begun to drive up wages _ which can prompt price increases from companies seeking to maintain their profits _ inflation has remained contained. It’s running at a 1.6 percent annual rate this year, compared to 1.7 percent for all of last year.

That’s partly because hard times in other countries have dampened world demand for many products, lowering prices on commodities from gasoline to coffee.

Some economists believe the lack of inflation worries could make it easier for Federal Reserve policy-makers, who next meet on Sept. 29, to decide to lower interest rates. Lower U.S. rates could help ease the international financial troubles, which started in Asia and have plunged a third of the world’s economies into recession.

But Federal Reserve Chairman Alan Greenspan, in congressional testimony Wednesday, played down that possibility.

In July, energy prices dropped a total of 1.0 percent as the costs of fuel oil, gasoline and electricity fell. Gasoline prices are running more than 15 percent below a year ago.

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