Business Notes

INFLATION Forgotten but Not Gone

Inflation may not be dead, but it certainly seems to have gone into hiding. The Department of Labor last week reported that the Consumer Price Index fell .4% in March, equaling February's decline. It was the first back-to-back price drop since 1965 and the steepest two-month decrease in more than 36 years. The main cause: declining energy prices, which were off 6.5% for the month.

The good news at the gas pump masked underlying trends that were less encouraging. The prices of non-energy items rose .3% in March. Medical costs led the way, with a 1% increase. Experts expect energy prices to flatten out soon and thus predict that inflation will rise from the grave. Washington Economist Michael Evans, for example, forecasts that consumer prices will rise at a 5% annual rate during the second half of 1986. INVESTING Distant Stocks, Instant Trades

When London Trader Stephen Raven checked a stock listing on his computer screen last week, then bought 1,000 shares of Electrolux from a New York dealer, he was not just making an investment. He was making history. As chairman of the International Markets Committee of the London Stock Exchange, Raven was executing the first transaction using a new transatlantic computer link.

Connecting the London Stock Exchange with the U.S. National Association of Securities Dealers, the link gives London traders ready access to the latest prices for nearly 200 of N.A.S.D.'s over-the-counter stocks, including Apple Computer and United Artists, while U.S. traders can look up current quotes on 288 London issues. The new service, said N.A.S.D. Chairman David Hunter, "is the beginning of the global network for 24-hour equity trading." Next stop for London's traders: the New York Stock Exchange. AUTOS How to Survive A Breakdown

What is the next-best thing to a car that never breaks down? How about an auto backed by a guarantee that if it sputters and stalls, the owner will get a free tow and in some cases a hot dinner, a free hotel room and an airline ticket? Starting May 1, Volvos will come with a three-year guarantee of free 24-hour access to service dispatchers who can arrange tows, repairs and even reimbursement of up to $500 for room, board and alternative transportation if needed.

Volvo's U.S. sales have nearly doubled in recent years, from 56,429 in 1980 to 102,305 in 1985, as the boxy but sturdy car has become a yuppie favorite. Now the company hopes to boost car sales further by freeing customers from the fear of being stranded. LAWSUITS A Wine and Cheese Parting

When money is at stake, family ties can be stretched thin indeed. The largest U.S. winemakers, Ernest and Julio Gallo of Modesto, Calif., have filed suit in U.S. district court in Fresno against their younger brother, Joseph Gallo, for alleged trademark infringement and unfair competition. Reason: since 1984, Joseph, a longtime California-based wholesale producer of meats and cheeses, has been marketing a retail brand under the name Joseph Gallo cheese.

Ernest, 77, and Julio, 76, say they bear no ill will toward Joseph, 66, but insist they must protect their trademark rights on principle. Otherwise, they argue, anyone would be able to use the family name. But Joseph, who is preparing a countersuit, was upset by a statement in his brothers' suit that shipments of the disputed cheese could conceivably become contaminated and damage the image of Gallo wines, which have been produced since 1933. Joseph's lawyer, John Whiting, points out that the cheeses have won gold medals at the past two Orange County fairs in California. Says Whiting: "This complaint has caused rancor because of the insinuations. Plainly it is not true that Mr. Gallo doesn't know how to make cheese. Joseph Gallo is very much a perfectionist and was kind of hurt that he was attacked this way." AIRLINES Trying to Foil a Merger

Eastern Airlines' labor leaders were none too pleased three months ago when their company agreed to merge with Texas Air. Reason: Texas Air Chairman Frank Lorenzo has earned a reputation as a fierce foe of unions. Now it appears that Eastern's workers may be maneuvering to foil the deal. Union representatives have been meeting with Jay Pritzker, a Chicago financier who controls Braniff Airlines and the Hyatt hotel chain. Pritzker is said to be considering a bid for Eastern in return for wage concessions from the workers. Texas Air controls 51% of Eastern stock, but Pritzker could conceivably make Lorenzo a lucrative offer that he could not refuse.