In the overall economy, there is no evidence of inflationary pressures bubbling to the surface, despite recent reports of a pick-up in the growth rate of wages and salaries in the U.S. The GDP inflation measure declined 0.2% during the first quarter of this year, and increased by a negligible 0.4% in the second quarter. This spell of low inflation has certainly been exemplified by the latest figures for producer prices. PRODUCER PRICE INDICES

Actual Annual change,%

June 98 1997 1998* 1999*

Intermediate goods 133.7 0.2 0.3 2.2

Finished goods 143.3 0.3 0.6 1.8

Mechanical power trans 157.6 2.2 1.9 2.5

Machinery and equip 125.1 -0.5 0.2 0.9

Material handling equip 131.1 1.8 1.4 2.2

Source: Bureau of Labor Statistics * Forecast: Cahners Economics

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