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SPIRAL OF RISING PRICES
A NATIONAL PROBLEM
EARLY next week a num
ber of new increases in
living costs will have to be
allowed for in the average
Victorian household budget.
.There will be a substantial
' rise in railway freights and
. fares, and already incrfeases
in the price of milk, sugar,
gas and other essential com
modities have added their
quota to the general cost oi
living, 'the rising price curve
is rapidly overtaking, If it
has, not already- entirely abr
sorbed, the recent 7/ increase
in the basic wage. It is under
standable that the average
wage earner, who counted on
gaining a few extra shillings
lor'; household expenses, is
worried to discover that the
take-home money in his pay
envelope goes no further than
it did before the increase was
granted',. Prices appear to fol
low wage Increases In re
morseless progression. And al
ways ; there- is a considerable
time lag, after prices have
outstripped the amount of eft-
fective wage increase/ before
the wage earner is able t.o
catch up again with yet an
other basic wage rise based
on added living costs.
So the vicious circle of
prices and wages goes on,
and, caught in the middle, of
it, the man on a small in
come - and others to a lesser
degree can . only wonder help
lessly what it is all about and
where the movement Is going
to end. The public frequently
is Informed of an authorised
increase in the price of a
certain household; commodity,
but It is extremely rare to
learn of a decrease in price.
The trend of .prices in the
past -few months has been
steadily upward, and the
basic wage earner is finding
Increasing difficulty. ; in bal
ancing the household - budget.
Saving is out of the ques-
. tion. \ .
. v. For. a time the.. basic wage
. . Increases caught: up with
-prices,, but now the circle
seems to be moving again.. If
it: continues to move upward
and forward, another basic
' wage increase is Inevitable.
The futility of this progression
is self-evident, and it is certain
to be' accentuated when the
. 40-hour week becomes effec
tive throughout the Common
wealth on January 1, 1948.
Higher costs In the processing
and manufacturing of many
foods, . clothing .and textiles
will have to be passed on to
the consumer.
If this movement of ris
ing prices followed by ris
ing wages could be stopped,
or materially slowed down,
to provide, as it were, a
breathing space for the con
sumer, the results would' be
immensely beneficial to the
national economy. Oversea
commentators have praised
Australia's , stable economy,
and It is true that this coun
try is relatively in a much
happier position than many
older countries rbeca"use of the,
reasonably effective way in'
which war-time controls have
operated. But it seems evi
dent that the utmost vigil
ance will have to be employed
by those whose task it is to
watch and control price fix
ing machinery: and to curb
inflationary tendencies if we
are to avoid the fantastic
Inflation. of prices from which
the United States is now suf
fering.
A repetition of American
experience in this country,
even; on a considerably modi
fied, scale, would, cause the
gravest social distress, be
cause price ceilings would be
come . meaningless and the
rocketing 'rise of -costs .'would
far outstrip slowly ascending
wage levels,. When price,
movements get out of hand,
the small-income man lags
further and further behind 'in
the race.. Not only do prices
rise, but the very movement'
of rising depresses the value
of his purchasing power, 'and
the rapidity: with which .prices
rocket governs the swift to
bogganing of real money
values. To a moderate ex
tent, this movement is de
monstrated by the greatly de
preciated value of the pound
to-day compared with th,e
pound of. 1939. The necessity
for maintaining effective price
controls on all important
commodities has been amply
demonstrated. Experience in
the United States and lat
terly in Canada shows the
wisdom of retaining the con
trols the Federal Government
is now exercising.
There- can be no question
of abolishing price control
machinery until production
and . supplies Indicate a
reasonable, approximation to
demand. The closest restraint
must be exercised upon all
inflationary tendencies if
Australian living : standards
and social conditions are not
to suffer irreparable injury.
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