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1. Most of the rise in the cost of living since the war began in September 1939 took place before enactment of the Price Control
Bill in January 1942.
Percentage Rise in the Cost of Living
Since War
Began in 1939
All Items
Food
Clothing
Rent
Housefurnishings
Fuel, Ice, and
Electricity
Miscellaneous
r
Since Passage
of the Act
'20.7
5.4
38.6
25,5
3.5
22.9
11.0
5.8
-0.6
3.3
8.9
11.3
1.7
2.1
,
1
v
2. The General Maximum Prioe Regulation halted the rising
cost of living"] Prior to the General Maximum Price Regulation, effective in May 19~42, the cost of living had been rising at an average
monthly rate of 1.1 percent. Since that time, the rise has been
limited to 0.5 percent monthly. As shown in Table 1 and .Chart 1, the
increase since May 1942 has been only a fraction of the rise in the
.same period of 1941 when inflationary pressures were far less.
Table 1
<
Percentage Changes in BLS Cost-of-Living Indexes
May 1941 .
to
October 1941
J
c
All Items
Food
Clothing
Rent'
Housefurnishings
Fuel, Ice, and Electricity
Miscellaneous
May 1942
to
October 1942
6.2
9.3
9.6
1.8
10.8
2.9
4.3
6.5
-0.2
-1.8
1.2
1.2
0.7
COST OF L I V I N G
PERCENTAGE PRICE CHANGES FROM MAY TO OCTOBER 1941 AND 1942
;<=<EEB
PERCENT
15
HOUSEFURNISHINGS
SOURCE
Office of Price Administration and
Bureau of Lobor Statistics.
MISCELLANEOUS
OIVISION OF RESEARCH
NO. 2678
/
- 2 -
3. Controlled prices have been almost completely stabilized
under the General Price Regulation.
YJholesale prices were down a fraction of 1 percent.
The cost of living was up a. fraction of 1 percent.
Retail food prices were up a fraction of 1 percent.
Retail clothing prices were down a fraction of 1 percent
Rents were down more than 4 percent.
Retail housefurnishing prices were up over 1 percent.
4. Tho small rise in the cost of living since May has been
due essentially to uncontrolled food prices which rose 16 percent,
This was almost twice as great as the corvesponding rise in 1941.
Controlled* food prices, in sharp contra^-;., rose only one twenty-fifth
as "much as in the earlier period. (See "'able 2' and Chart 2 ) .
Table 2
>
,
Percentage Change in Cost of Living
May to October, 1941 and 1942
•
>
s
>
All Items
Foods
Covered by the General Max
1941
1S42
May to Oct.
May to Oot
Exempted from the General Max
1941
1942
May to Oct.
May to Oct.
9.0
0.5
4.4
6.2
10.2
0.4
0.3
15.9
i
5. The continued rise in food prices has been due to statutory limitations. Foods which could not be covered under the General *
Price Csiling include such important items as wheat flour, corn meal,
lamb, poultry, butter, cheese, evaporated milk, eggs, and many fruits
and vegetables. While coffee, tea, and sugar — all controlled —
declined slightly, lamb, eggs, and butter rose 12 percent, 43 percent,
and 18 percent respectively. For additional items,, see Table 3 and
Chart 2-A.
()
O
CHAh i ^.
EFFECTIVENESS OF THE GENERAL MAXIMUM PRICE REGULATION
PERCENTAGE PRICE CHANGES FROM MAY TO OCTOBER 1941 AND 1942
COVERED BY GENERAL MAXIMUM
EXEMPTED FROM GENERAL MAXIMUM
ALL COST OF LIVING ITEMS
RETAIL FOOD
15
1941
SOURCE. Office of Price Administration and
Bureau of Labor Statistics
1942
1941
1942
OFFICE OF PRICE ADMINISTRATION
DIVISION OF RESEARCH
NO. 2 6 7 7
CHART
EFF GTIVENESS OF THE GENERA^ MAXIMUM PRICE REGULA..ON
SELECTED RETAIL ITEMS
PERCENTAGE CHANGES FROM MAY TO OCTOBER 1941 AND 1942
PERCENT
CONTROLLED BY THE GMPR
EXEMPT FROM THE GMPR
PERCENT
60
50
40
-10
-10
PORK CHOPS
PINK SALMON
U Controlled after the October 2 n d amendment
to the Price Control Act.
SOURCE Bureau of Labor Statistics and
http://fraser.stlouisfed.org/Office of Price Administration.
Federal Reserve Bank of St. Louis
MILK
CANNED PEAS
ORANGES"17
BUTTER-^
LETTUCE
SPINACH
OFFICE OF PRICE ADMINISTRATION
DIVISION OF RESEARCH
NO 2 7 3 4
- 3Table 3
Percentage Price Changes from May to Qctober 1941 and 1942
Solected Retail Items '"
1941
1942
C o n t r o l l e d by GlvIPR
.
Pork Chops
Pink Salmon
Hi Ik
Canned Peas
19.4
13.5
11.5
3.0
-0.2
0.9
0.7
-7.6
32,5
5.3
-4.1
7.9
41.7
18.2
51.1
31.1
Exempt from GMPR
Oranges l/
Butter T/
Lottuoo
Spinach
*\
'
1/ Controlled after passage of the Act o"f October 2 amending the
Price Control Act.
The Cost of Living in Two Wars
.
The effectivenoss of prico control in this war is evident
from a comparison with the last war. ("harts 3 - 7 ) During the third
year of World War I -- October iyi6 to ,*3tober 1917 — the cost of
living rose almost 20 percent. During t,he third year of this war —
October 1941 to October 1942 — the rise was about 9 percent, or less
than half as much. And most of this increase occurred before the General
Max went into effect in May.
In such a two-war comparison, it should be recognized that
price pressures are much greater today because this is the biggest war
in the nation's history. War production never exceeded one-third of
total production in World War I. War production today is already more
than ono-third of total production and tho goal is much higher. As inflationary pressure increases with the size of tho war program, prices
might be expected to rise at an accelerating rate in accordance with the
price pattern of the last war. Instead, the opposite trend has occurred.
During the 12 months preceding the effective date of the General Max, the
cost of living rose more than 1 percent a month. Since the General Max,
the rise has boon only one-half of 1 percent a month.
...,T 3.
.
INCREASES IN THE COST OF LIVING IN THE THIRD YEAR OF WA~R
OCTOBER 1941 TO OCTOBER 1942 COMPARED WITH OCTOBER 1916 TO OCTOBER 1917
f
]
WAR I
i
WAR 13 !
PERCENTAGE INCREASES
10
1 1 1
15
J i l l
20
l-
f
I
I
All Items
Food
Clothing
Housefurnishings
SOURCE Office of Price Administration
and Bureau of Labor Statistics
DIVISION OF RESEARCH
NO 267 3
CHART 5.
RETAIL FOOD PRICES IN TWO WARS
240
INDEX
240
220
220
200
200
INDEX
/
180
War I
(July, 1914=100) f
V
160
180
I
\
1/
V
I
160
140
140
/
/
1 •
I /
f f
I'
r
120
(Augus^/939^100)
1
Its
120
f'l
Jr
100
100
80
80
1914
1939
1915
1940
1916
1941
SOURCE: Office of Price Administration and
Bureau of Labor Statistics
1917
1918
1942
1943
1919
1944
1920
1945
1921
1946
OFFICE OF PRICE ADMINISTRATION
DIVISION OF RESEARCH
NO. 2649
CHART 4.
•I
COST OF LIVING IN TWO WARS
INDEX
220
INDEX
220
200
200
180
160
100
80
80
1914
1939
1915
1940
SOURCE'.'Office of Price Administrotion
and Bureau of Labor Statistics
1916
1941
1917
1942
1918
1943
1919
1944
1920
1945
1921
1946
OFFICE OF PRICE ADMINISTRATION
DIVISION OF RESEARCH
NO 2648
CHART 6.
RETAIL CLOTHING PRICES IN TWO WARS
INDEX
350
INDEX
350
300
300
250
250
200
k—
200
150
150
100
100
1914
1939
1915
1940
1916
1941
SOURCE: Office of Price Administration and
Bureau of Labor Statistics
1917
1942
1918
1943
1919
1944
1920
1945
1921
1946
OFFICE OF PRICE ADMINISTRATION
DIVISION OF RESEARCH
NO. 2671
CHART 7.
RETAIL HOUSEFURNISHINGS PRICES
IN TWO WARS
World War I
(July 1914-100)
4J4jjiA]Jj-uuUMi4i^^
1914
1939
SOURCE'.
1915
1940
1916
1941
1917
1942
Office of Price A d m i n i s t r a t i o n and
Bureau of Labor S t a t i s t i c s
1918
1943
1919
1944
1920
1945
1921
1946
OFFICE OF PRICE ADMINISTRATION
DIVISION OF RESEARCH
NO. Z670
'.
•
- 4 -
>
The following table compares tho total percentage increase
in living costs during the World War I inflation with the percentage
increase that had occurred in this war by October 1942:
Percentage Increase
World War I
World War II
Total Cost of Living
108
Food
. .
Clothing
^_
Housefurnishings
126
200
179
39
26
23
Tho Outlook
\
*
v
Some further increases in retcul food prices must bo expected during the next few months for tv..: main reasons: (l) adjustments made because of the squeeze on rol'iilora and because of increases in farm prices, and (2) violations of OPA regulations.
*
In those cases where roto.il prices had not been marked up
as fast q.s the rise in replacement costs, March ceilings involved
an unjustifiable squeeze on distributors' margins, and it has been
necessary to make slight upward adjustments for thic reason, Because of increases in uncontrolled farm prices, it has been necessary
to raise processors' and distributors' ceiling prices on certain important foods such as lard, canned fish, canned vegetables, sugar, coffee,
and breakfast cereals. Furthermore, tho Dcpartmont of Agriculture is
supporting the prices of certain farm p. -.-ducts in order to maintain
and encourage production. The .-result he* been to increase the pressure on ceiling prices and to make neccsary some upward adjustments.
Retail prices have not yet fully rofloo'Vod these various adjustments.
Some further price increases will arise from violations of
OPA regulations. Most of these violations will be innocent but some
Trill be willful. Simplification of the regulations will eliminate
many innocent violations, but some willful violations will continue
and they must be dealt with.
The outlook is encouraging. The General Max has stabilized
that part of the cost of living which was subject to control in May.
Since the Act of October 2, most of the food items which were running
away between May and October have been placed under ceilings. Tho most
immediate problem is that of simplifying the retail regulations and
the OPA is hard at work on this. Thereafter, stabilization of living
costs resolves itself into a job of enforcement. This job must be
done because stabilization of living costs is essential to attainment
of a maximum war effort.
^
Office of Price Administration
Division of Research
Deceirher 21, 1942
A
@FedFRASER