Boston tops inflation list

Inflation nationally is running at the fastest pace in 17 years, but the Boston area is being hit particularly hard. The federal Labor Department reports that consumer prices in greater Boston jumped 6.3 percent in the last year, the greatest jump in any metropolitan area. It’s the biggest increase in the region since 1990. Nationally, inflation increased by 5.6 percent over the past year, the largest 12-month jump since the period ending in January 1991. The local jump is blamed primarily on increases in home heating oil and lodging. Food prices, however, increased at below the national rate. Goods tend to cost more in the Boston area because the region is far from the centers of food and energy production.

Mrs. Fields out of dough

Mrs. Fields Famous Brands LLC, the cookie and frozen yogurt company based in Salt Lake City, said it plans to file for bankruptcy and began seeking support from creditors for a so-called prepackaged Chapter 11 plan. The company filed the turnaround plan yesterday with the U.S. Securities and Exchange Commission. Unsecured creditors would be paid in full under the proposal while equity holders would get nothing. Creditors must vote by Sept. 15. “We are highly leveraged relative to our cash flow, our liquidity position has been steadily deteriorating and is currently severely restricted and we will not be in a position to make the interest payment due” Sept. 15, Mrs. Fields said in its SEC filing. “The company believes that the restructuring will reduce uncertainty with respect to its future.” In a prepackaged bankruptcy, creditors vote on terms of the reorganization before the actual bankruptcy filing, allowing the company to emerge from Chapter 11 more quickly. Mrs. Fields has 1,268 franchised and licensed locations under the names Mrs. Fields Cookies and TCBY in the U.S. and 21 other countries, the company said in court filings. Mrs. Fields said it ended the second quarter with assets of $139.1 million and debt of $259.4 million, $195.8 million of which was long-term debt.

Service members get baggage break

Some airlines have begun giving military personnel on official travel a pass on expensive baggage fees when they carry heavy duffel bags stuffed with combat gear. Faced with criticism from veterans groups and others that the fees are a financial burden, several airlines have announced exceptions for service members. AirTran Airways, Delta Air Lines, and Northwest Airlines said yesterday they were waiving all or most of their baggage fees for active members of the U.S. military on official travel. Earlier this week, American Airlines, Southwest Airlines Alaska Airlines and Horizon Air began waiving their fee to check a third bag for active service members. Many airlines struggling with the high cost of jet fuel implemented or increased baggage fees this year. Some service members, including those deploying to and from combat zones, have said they’ve been asked to pay as much as $300 extra for overweight duffel bags that may include body armor and other vital combat equipment. Veterans of Foreign Wars Commander In Chief George Lisicki sent a letter this month to the Air Transport Association, which represents the airline industry, asking for a break for service members. David Castelveter, a spokesman for the transport association, said he expects most airlines to drop or modify their fees for military personnel on official travel. The Pentagon reimburses service members for bag fees incurred during official travel, but not for personal travel, Defense Department spokeswoman Eileen Lainez said.

Vehicle sales growth slows in China

The rapid growth in Chinese sales of sedans, SUVs and light trucks slowed sharply in July as sales rose just 6.8 percent over the same month of 2007, the lowest monthly expansion rate in two years, an industry group reported yesterday. Sales of sedans rose by just 1.6 percent, according to the China Association of Automobile Manufacturers. It was the fifth straight month that sales growth has declined. Growth was at double-digit monthly rates early this year. China is the world’s second-largest auto market after the United States, and global automakers are counting on it to drive revenues as sales elsewhere slump. But analysts say high oil prices are prompting Chinese drivers to postpone purchases and have lowered sales forecasts for this year. Total sales of sedans, sport utility vehicles and light trucks in July was 488,200 units, the CAAM said. It said 360,800 sedans were sold. In a move to curb rising gasoline consumption, the government this week doubled sales taxes on the biggest cars from 20 percent to 40 percent while cutting taxes on smaller cars. This month, auto consulting company J.D. Power and Associates cut its forecast for China’s 2008 auto sales to 5.95 million, down from 6.2 million units earlier.

Debt ratio a source of hope, analysts say

U.S. companies may be in a strong enough position to endure the economic slowdown, just as they did in 2001, as a key measure of leverage remains near the historical average, analysts at Lehman Brothers Holdings said. Debt as a percentage of U.S. companies’ total market capitalization rose to 32 percent, the same as in 2002 following the last U.S. recession, analysts led by Jack Malvey, Lehman’s chief global fixed-income strategist in New York, said. “This stands well below the recession-linked 1990 summit of 38 percent coming off the LBO/MBO-fueled debt bonanza of the 1980s,” Malvey wrote in a report published yesterday. “The aggregate U.S. corporate sector appears well positioned to weather this unfolding economic correction of the late Oughts.” The debt-to-capital ratio is now 1 percentage point above the average of the past 35 years, Lehman said. Citing strong balance sheets, the ability of U.S. companies to make it through the slowdown is “statistically equivalent” to its position in 2001 and ahead of other recessions dating back to 1973. As a result, U.S. companies may be able to “encourage the resumption of world and U.S. economic growth,” Malvey wrote. That would be “slightly unusual, but surely probable,” according to the report.

Editors file brief against Wyeth

Consumers should be allowed to sue drugmakers for failing to warn of dangers even if prescribing literature for a drug was approved by regulators, six current and former editors of the New England Journal of Medicine said in a brief filed with the U.S. Supreme Court. The brief, filed in the case Wyeth v. Levine, was the first to be signed by every editor-in-chief of the medical journal, Marcia Angell, one of the former editors, said yesterday. The Supreme Court is reviewing a $6.8-million award to musician Diana Levine, who lost her arm after being injected with Wyeth’s anti-nausea treatment Phenergan. The Vermont Supreme Court upheld the jury award to Levine, who says Wyeth should have warned against the injection method that caused gangrene in her right arm. Wyeth contends that the lawsuit is barred because the Food and Drug Administration approved the medicine’s prescribing information. The case will test whether federal drug laws should trump state laws, known as “preemption.” “We all agree that preemption is a terrible idea, especially given the fact that the FDA no longer adequately performs its function of assuring that new drugs are reasonably safe and effective,” Angell said yesterday in a phone interview. “If drug companies know that they are likely to end up in court, they might be more careful, less cavalier about safety.” Wyeth, of Madison, N.J., gained 46 cents, or 1.1 percent, to $43.29 at 4 p.m. in New York Stock Exchange composite trading. Doug Petkus, a spokesman for the company, didn’t immediately have a comment on the journal editors’ brief. Heidi Rebello, a spokeswoman for the FDA, didn’t immediately return messages seeking comment.