Cost of Living

Report Outline
Outlook for Relative Stability in 1954
Postwar Living Costs and Spending Power
Food Prices and Costs of Marketing
Rise in Costs of Shelter and Medical Care
Business Activity and Consumer Welfare
Special Focus

Outlook for Relative Stability in 1954

Small Loss of Dollar Buying Power in 1953

Despite the new “all-time highs” registered by the consumer price index for most of the months of 1953, which resulted in wage increases for some three million workers covered by escalator clauses in union contracts, the overall increase in the cost of living during the year was no more than one per cent and the loss in purchasing power of the dollar was less than one penny. As the year 1954 began, prices of goods and services needed by the average family gave every sign of having reached a point of stabilization. The present level is approximately 15 per cent above the average for the first six months of 1950, before the Korean outbreak, when the consumer price index stood in the vicinity of 100.

Opening a White House conference with legislative leaders, Dec. 17, on plans for the 1954 session of Congress, President Eisenhower said his administration, among other accomplishments during its first eleven months, had “stabilized the purchasing power of the citizen's dollar and stopped inflation.” Eisenhower's first message to Congress on Feb. 2 announced a program for rapid liquidation of the price controls imposed under the Defense Production Act of 1950. With the removal of controls, he said, some prices would rise but others would fall. If freer functioning of the economy did not check inflation, he would “promptly ask Congress to enact such legislation as may be required.” During recent months the fall in farm prices has given more cause for concern to the administration than the slow rise during 1953 in prices paid by consumers.

Retail prices of food rose slightly in December, after a sharp decline in November, but are expected to remain relatively stable during the early months of 1954. Government economists look for a continued slow retreat in prices of clothing, home furnishings, and household appliances, with a continued slow advance in costs of urban housing, medical care, transportation and domestic help. Barring a war emergency or a severe economic recession, the experts foresee no great change, upward or downward, in the overall cost of living during the months immediately ahead.