INFLATION; Consumers can cope

By , Business and financial correspondent of The Christian Science Monitor

Robert Arcand is one of millions of Americans learning to cope with rampaging double- digit inflation. Ironically, how he is personally dealing with soaring prices both pleases and concerns him.

Mr. Arcand is president of the Glass Gallery, a gift shop in the popular West Acres Shopping Center in Fargo, N.D. To trim his personal gasoline costs as much as possible, he makes certain to do all grocery shopping at the closest food store when he goes home from work. He has also cut down on all "unnecessary" personal expenses and uses cash instead of credit whenever possible.

Yet, he notes, that is exactly what his customers are doing. And that presents real problems for his own business.

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Business at the Glass Gallery had dropped during past weeks, as it has for other merchants in the shopping center. Cash sales have begun to replace crdit-card transactions, and shoppers seem to be looking for less costly merchandise.

In fact, says Mr. Arcand, some days are now "so quiet that you could almost go out and play a baseball game" in the center of the shopping complex

Throughout the Greater Fargo area, says Bob Lind, city editor of the Fargo Forum, businesses are starting to feel the impact of reduced purchases by families who are slashing budgets to meet the inroads of inflation. At the same time, he says, Fargo residents appear to be gradually altering their life styles.

What's happening in the Fargo area, say economists, is to a large extent being duplicated in hundreds of thousands of other communities throughout the US.

Roaring inflation -- mixed with a threat of deeper recession and job layoffs during the weeks and months ahead -- is forcing americans to take a close look at their family budgets and to put off many planned "big ticket" purchases such as TV sets, new cars, and expensive vacations.

"For the first time ever in my married life, my wife and I are ironing our own clothes instead of sending them out to the dry cleaner," laughs one northern Virginia businessman. He reckons that saves anywhere from $12 to $15 a month.

That type of attention to detail is not unique. Bankers -- such as Philip M. Comeford, president of State National Bank of Rockville, Md. -- note that depositors have been scrambling to remove savings from low paying passbook accounts and put them into higher yield, long-term certificate accounts whenever possible. Many have been removing deposits altogether and investing them in money market funds that were paying 12 percent or better annually. However, this picture has changed somewhat in recent weeks, with interst rates dropping as the US enters what appears to be a deep recession.

Consumers are confused, to say the least. Experts recommend a number of key steps families can take at this time:

* Savings. Many consumr economists argue that families with some cash to spare for investment should once again seriously consider buying into mutual funds specializing in bonds, or into stock (equity) funds. At the same time there are the more "traditional" options such as shorter term US Treasury bills (although rates have been falling), bank savings certficates, and money market mutual funds. In the case of passbook accounts, the saver should "shop" for the highest possible yields. Some state-insured savings institutions in Maryland, for example, pay 7 percent interest, compared with the standard 5.5 percent at most savings and loan institutions.

* Purchases. Credit costs, now around 18 percent for many accounts, are expensive. That indicates cash should be used for purchases whenever possible and that buying of costly items should be deferred. Look for best buys at "discount" chains, or at least for advertised specials.

* Necessities. Consider barter (swapping goods and services) whenever possible. Be certain to check with your local tax consultant on barter, however , since the US Internal Revenue Service requires that personal gain from barter be treated as income. For food items, use "house" or "no frills" brands. Eat fewer convenience foods, stretch out left- overs, avoid big soda pop bills. Look for seasonal sales. Shop factory outlets for clothes.

* Taxes. Make certain you are paying only your "fair share" tax bill. That means looking even more closely at all permissible deductions, while saving, whenever possible, on sales taxes.

* Cars. Do simple auto servicing and even some repair work yourself. Use public transportation or car pools to get to work.

Most important, say consumer experts, families should take time once or twice a month to sit down together and go over all their spending habits. That quickly pinpoints unnecessary purchases.

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