THE Wairarapa Age MORNING DAILY FRIDAY, AUGUST 20, 1909. THE TREND OF PRICES.

Wairarapa Age, Volume XXXII, Issue 9573, 20 August 1909, Page 4

THE Wairarapa Age MORNING DAILY FRIDAY, AUGUST 20, 1909. THE TREND OF PRICES.

The "Economist's" review ot the course of prices during the first half of the present- year is of especial interest just now, when we are all eagerly scanning the h'nanciHl horizon, anxious for the first sign of a renewal of prosperity in the Mother Country. At first sight the movements shown by the Index Number o'f prices look satisfactory. There has been an appreciable advance during the half year the Index Number which was down to 2,176 at the end of 'March having risen continuously since that date to 2,240 at the end of June, a rise of nearly 3 per cent, during the quarter. Under most circumstances this advance would be rightly regarded as a sign of recovery, but the "Economist" points out that the present instance is only one <*£ those which prove the danger of relying too exclusively on price movements as an indication of prosperity. , A rise in prices is enly welcome when it indicates an increased demand for the commodities used by the industries of the country. In the present case the rise since the end of December is entirely Accounted for by the advanced prices of wheat and cotton. The former, as the "Economist" further points out, limits the purchasing power of the community lor other articles—New Zealand frozen mutton and butter, for example. > The advance in uotton is due to conditions in the American market, and ha 3 not been accompanied by a corresponding rise in the price of finished goods, and has, therefore, had the effect of restricting the profits of the English manufacturer. Apart from these two commodities prices have continued at the same dead level which has been steadily maintained since April, 1908. In commenting on these figures, the "Economist" further draws attention to the fact that there is a remarkable parallel to the history of the fifteen months ending June 30th, 1908, in the movement of prices during 1904-05. In' May, 1904, the index number fell below the basis (2,200), and continued so for fifteen months until the middle of 1905. In August the revival set in, and the upward movement of prices continued almost unabated until the boom of 1907. The succeeding depression was world-wide, and it is natural to suppose that .the recovery I must be slow and steady. Our contemporary considers that "the period of depression has lasted long enough to justify the hope that wo may see the beginning of revival in the coming autumn." A great deal, however, will depend upon how the harvest turns out in North America and in the Old World. If this is generally satisfactory the recovery should be fairly rapid. Meanwhile the Board of Trade returns, showing a marked improvement in British imports and exp r a, are a most encouraging sign.