INFLATION: The Latest Casualty

One severe difficulty facing any program to bring inflation under control is the problem of momentum: last year's price increases tend to push up other prices today, regardless of what the general economy is doing. A prize example is auto insurance. Soaring auto-repair bills and medical costs during the last two years are causing auto insurers to raise premium rates to motorists—fast enough to help push up overall living costs more rapidly than some economists had expected.

During 1975, auto-insurance premiums rose an average 20.7%, and some big further increases are coming. Allstate early in December announced that it would...

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