ROANOKE TIMES

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, March 20, 1990                   TAG: 9003202826
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-2   EDITION: EVENING 
SOURCE: Associated Press
DATELINE: WASHINGTON                                 LENGTH: Medium


CONSUMER PRICES RISE MODERATELY

The biggest one-month drop in fuel oil prices in 55 years offset a record gain in clothing costs and increases elsewhere, holding consumer inflation in February to a moderate 0.5 percent, the government said today.

The gain in the Labor Department's Consumer Price Index followed a huge 1.1 percent rise in January.

A turn-of-the-year cold snap sent energy and food costs soaring in January. With warmer-than-usual temperatures in February, fuel oil prices recovered. However, food prices are taking longer to recover.

Taken together, the first two months of the year represent an annual inflation rate of 9.9 percent. However, most analysts expect a succession of milder reports this year and look toward a 1990 rate just under last year's 4.6 percent.

Energy prices overall were down 0.7 percent following a 5.1 percent gain in January.

The department said fuel oil, which advanced 26.3 percent in January, fell back 18.7 percent in February, a record since 1935 when the government first began tracking the price.

Gasoline rose 0.8 percent after a 7.7 percent rise. Natural gas and electricity rose 0.6 percent after a 0.3 percent increase.

Food costs rose 0.5 percent in February after a large 1.8 percent rise in January.

Dairy products rose 0.9 percent. So did fruit and vegetables, following a 10.2 percent rise in January after a freeze ruined crops from Texas to Florida.

Tomatoes jumped 30.7 percent in February. For the two months combined, they were up 129.4 percent.

There were declines for sugar and sweets and fats and oils.

Excluding the volatile food and energy categories, prices rose 0.5 percent. This "core" number is generally considered a better indication of underlying inflation pressures.

However, it was driven higher by an unusually high 3.3 percent rise in clothing and upkeep prices on a seasonally adjusted basis. It was the sharpest rise since 1947.

A department analyst said spring fashion lines were introduced earlier in the year than normal, throwing off the department's seasonal statistical adjustments.

Infant's and toddler's clothing rose 10.3 percent. Women's and girls' clothing was up 5 percent, while men's and boys' clothes rose 1.2 percent.

There was a 0.2 percent drop in new car prices as dealers tried a new round of incentives to stimulate lagging sales.

The various changes left the Consumer Price Index at 128.0 before seasonal adjustments. That meant that a hypothetical selection of goods and services costing $100 in the 1982-84 base period would have cost $128 last month, up from $121.60 a year earlier.

In other details, the department said services rose 0.4 percent, including a gain of 0.8 percent for medical care.

The overall increase, largely because of the jump in clothing costs, was about double what was expected in advance by analysts.

A drop in food prices as a new vegetable crop is harvested should produce a smaller overall price increase in March, analysts believe.

For the year, they expect inflation to be stable because low unemployment is keeping wage increases from declining and sluggishness, particularly in manufacturing, is keeping inflation from getting out of control.



 by CNB