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Monday, 17 December 2007

Alan Greenspan Says He Sees `Early Symptoms' of Stagflation

By Christopher Wellisz

Dec. 16 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said he sees warning signs of so-called stagflation, a combination of slow economic growth and rising prices.

``We are beginning to get not stagflation, but the early symptoms of it,'' Greenspan said on ABC's ``This Week'' program.

``We had a period of remarkable disinflation'' in the years following the end of the Cold War, when inflation rates declined, Greenspan, 81, said. ``That period is now coming to an end.''

Greenspan cited rising prices of Chinese exports together with declining productivity increases in the U.S. and elsewhere as signs that the era of declining inflation rates may be ending.

U.S. consumer prices rose the most in more than two years last month on record energy costs, a government report last week showed. The consumer price index increased 0.8 percent in November, up from 0.3 percent the previous month. Prices excluding food and energy climbed 0.3 percent.

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