Business: How to Stop Inflation

Just as many labor contracts are tied to the Bureau of Labor Statistics index of consumers' prices, so billions of dollars worth of business contracts are tied to the BLS wholesale price index. Frequently, the delivered prices of new ships, houses, engines, etc. depend upon the fluctuations of this index from the time they were ordered.

Last week this important index underwent a big change. The Labor Department brought it up to date by including scores of products (television sets, antibiotic drugs, plastic materials, Orion, frozen foods, etc.) which scarcely existed when the old index was drawn up in 1932. Listing twice as many commodities (a total of 1,845), it will provide a more accurate cross section of present-day markets. One change, however, stirred up criticism: 1947-49 average prices were used as the index base of 100, instead of the old base of 1926 prices. Result: when the old index ended, it stood at 174.8, or 74.8% above "normal," while the new one began at 111.7, only 11.7% higher. Cried critics: a handy device for the Administration to hide the effects of inflation in a presidential election year.