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

DATE: WEDNESDAY, February 20, 1991                   TAG: 9102200616
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-2   EDITION: EVENING 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

CONSUMER PRICES SHOW RISE DESPITE LOWER COSTS FOR OIL

New federal excise taxes on alcohol, tobacco and luxury goods and a freeze-induced climb in fruit and vegetable costs kept consumer prices rising 0.4 percent in January despite falling oil prices, the government said today.

The rise in the Labor Department's Consumer Price Index, if continued for 12 consecutive months, would produce an annual inflation rate of 5.5 percent. Still, it was more moderate than the rate for all of 1990, 6.1 percent.

Most economists believe the factors pushing prices higher in January were onetime events. They believe the sluggish economy will curb demand and keep inflation under control this year.

In another economic report today, the Commerce Department said housing starts plunged 12.8 percent in January to their lowest level since the last recession nine years ago. The government said starts totaled a seasonally adjusted annual rate of 850,000 units, the smallest number since January 1982.

The break in oil prices following the beginning of allied bombing of Iraq helped push energy prices down 2.4 percent in January, following a 0.4 percent drop a month earlier.

Gasoline prices, which had shot up 27.2 percent in the four months ending in November, dropped 6.9 percent in January and 0.4 percent in December. Fuel oil prices, which rose 52.6 percent in the three months ending in November, have now fallen 11.6 percent in the following three months, including a 5.6 percent drop in January. However, electricity costs rose 2.8 percent last month and natural gas was up 1 percent.

The outbreak of war in the Persian Gulf has pulled down crude oil prices to near the level before Iraq invaded Kuwait on Aug. 2. Oil traders have pushed prices lower in the belief that allied bombing had destroyed Iraq's ability to disrupt Saudi Arabian oil production.

by CNB