Inflation tame despite U.S. consumers’ shopping spree

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Wednesday, Dec. 15, 1999 | 10:57 a.m.

THE ASSOCIATED PRESS

WASHINGTON -- Americans went on a shopping spree last month and pushed up retail sales by 0.9 percent, giving merchants a strong start to the holiday season. At the same time, consumer prices edged up just 0.1 percent.

Two reports, released Tuesday, show that the nation's economy, supported by consumer spending, continues to barrel ahead, thus far without triggering inflation, economists said.

Many economists expect the Federal Reserve to leave interest rates unchanged when it meets next week, largely because of uncertainty whether problems might occur from the Y2K computer changeover.

But the Fed has bumped up rates three times this year to slow the economy and keep inflation under control and is likely to raise rates again early next year, economists said. They said the strong retail sales report would justify that, because of the probability that the economy can't sustain such rapid growth without producing inflation down the road.