Consumer Costs Decline 0.4%, Most Since ’53

Plunging petroleum prices and sharply lower food costs drove consumer prices down 0.4% in February, the sharpest drop in more than three decades, the government said today.

Last month’s decline matched the one in November, 1953, and was exceeded only by a 0.9% decline in July, 1949.

Before February, the last drop in inflation at the retail level occurred in December, 1982, when the U.S. consumer price index edged down 0.1%, the Labor Department said.

The Commerce Department, meanwhile, reported that new orders to factories for durable goods fell 0.5% in February, the first drop since November. In January, orders rose 0.9%.

Durable goods are generally expensive items designed to last at least three years, such as home furnishings, appliances and military hardware.

All of last month’s weakness was concentrated in orders for defense equipment. Without the 29.5% plunge in bookings from the Pentagon, total orders for durable goods would have risen 2.5%.

Modest Rise in January

The drop in the consumer price index followed a modest 0.3% rise in January.

At the White House, spokesman Larry Speakes said the decline, along with February’s increase in personal income, sends the message that “Americans are making more money, and with inflation virtually nonexistent, they can buy more goods and services with it.”

The major factor in the February decrease in the cost of living was the continuing dramatic drop in petroleum prices. Gasoline prices fell 5.9% in February, after a 0.1% increase the month before. Home heating oil costs dropped 10.1%, after dropping 1.1% in January.

February’s decline, if continued for 12 straight months, would be equal to an annual decrease of 4.6%, the Labor Department’s Bureau of Labor Statistics said.

Food prices declined in February by 0.7%%, after increasing 0.2% the month before.

The decline in food prices was led by a 7.5% drop in the price of vegetables and fruits and a 1.4% decrease in the price of meats and poultry. Partly offsetting the declines in food prices was an increase in the price of coffee. Ground coffee increased 26.7% and instant coffee 15.1%, reflecting a continued drought in Brazil.

Further Oil-Gas Decline

Apart from food and energy, consumer prices rose an overall 0.2% in February.

Gasoline price drops had already shown up in wholesale prices.

The producer price index for February, released earlier this month, showed a drop of 1.6%--the largest ever recorded and equivalent to an annual decline of 17.1%.

Economists said they anticipate that oil and gasoline prices will continue to decline before leveling off.