INFLATION SLOWS, THOUGH WORRY GROWS

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

DATE: THURSDAY, March 18, 1993                   TAG: 9303180086
SECTION: BUSINESS                    PAGE: A11   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium
INFLATION SLOWS, THOUGH WORRY GROWS
Inflation slowed in February, but it still worried some analysts because the largest price increases came in goods that are normally the most stable.
Nevertheless, most think government figures released Wednesday show consumer prices under control. And another government report made clear the industrial sector continues to grow.
The Labor Department reported a moderate 0.3 percent increase in its Consumer Price Index in February. That was down from the 0.5 percent jump in January, which was the largest increase since 0.6 percent in January 1991.
A quarter of the overall increase was attributed to apparel prices, which shot up 1.5 percent during the month. Apparel prices are part of the normally more stable core inflation rate, which excludes volatile food and energy prices.
And that core inflation rate shot up 0.5 percent for the second month in a row.
"We've got to be careful not to overreact to just two months' data," suggested Chris Varvares, an economist with Laurence H. Meyer and Associates, a St. Louis economic forecasting firm.
"I think the CPI will remain very well restrained . . . but it bears watching," he added.
Consumer prices rose just 2.9 percent in 1992, the smallest increase in six years.
The CPI report said the cost of men's and boy's clothing rose 1.4 percent; women's and girl's jumped 2.7 percent. But the cost of infant's apparel dropped 0.7 percent, and shoe prices were unchanged.
Food prices edged up 0.1 percent, much less than the 0.4 percent gain in January. The moderation was led by a 1.2 percent decline in the cost of fruit and vegetables, which had risen more than 1 percent in each of the three preceding months.
Prices for dairy products also declined, and there were smaller increases for meats, poultry, fish and eggs. That was partially offset by a 1 percent jump in cereal and bakery product prices, the largest since January 1992.
Energy prices fell 0.4 percent after jumping 0.5 percent in January. A decline in charges for energy services more than offset an increase in petroleum products.
Transportation costs were up 0.5 percent, down slightly from a 0.6 percent gain a month earlier. Gasoline prices rose 0.6 percent. Public transportation increased 1.5 percent, reflecting a 2.2 percent rise in airline fares.
Housing costs increased 0.2 percent following a 0.3 percent gain in January. Fuel oil prices rose 0.3 percent and other utilities gained 0.7 percent. But natural gas costs were down 1.5 percent.
Medical care slowed to a 0.5 percent advance from 0.6 percent a month earlier. Entertainment costs were up 0.1 percent, tobacco prices 0.6 percent.
The various changes left the Consumer Price Index at 143.1 in February, meaning a market basket of goods costing $100 in the base period of 1982-84 would have cost $143.10 last month.

by Archana Subramaniam by CNB