Consumer Prices Rise 0.4% in Oct. : Inflation Relatively Tame With Moderate 4.8% Annualized Rate

Consumer prices jumped 0.4% in October with increases across a wide range of products more than offsetting lower energy costs, the government reported today.

It was the steepest gain since a 0.5% rise in August.

The report, following one last week showing that wholesale prices had dipped an unexpected 0.2% in October, was viewed by analysts as further evidence that inflation remains generally tame this year despite other economic problems stemming from the stock market crash.

Retail price gains for the first 10 months of the year amounted, on an annualized basis, to a moderate 4.8%, the Labor Department said, with much of that gain due to the sharp rebound in energy prices earlier in the year.

If October’s 0.4% continued for 12 consecutive months, the annual inflation rate would be just 4.6%. September’s inflation rate had been a subdued 0.2%.

By contrast, consumer prices last year rose a minuscule 1.1%, largely the result of the collapse in world oil prices.

Inflation this year is running more in line with the levels that prevailed from 1982 through 1985.

As for October, gasoline prices fell 0.3% after a 0.2% drop in September.

Other Costs Down

Overall, energy costs were down 0.9%. Natural gas and electricity costs dipped 1.6%, and home heating oil costs fell 0.4%.

Food costs were up 0.3% after a 0.5% rise in September, and were paced by a sharp 1.3% drop in fruit and vegetable prices.

For goods other than food and energy, prices rose 0.5%. This included a 0.6% price increase for new automobiles. Part of this higher cost reflects more expensive imports due to the declining value of the dollar against other major currencies.

The retail price gains of October were far above the 0.2% decline posted at the wholesale level. But some disparity had been expected by economists.

For one thing, the wholesale price index reflects prices of goods only from U.S. industries and farms. It does not include two categories in which prices have been rising more rapidly: imported goods and services such as medical expenses and rent.

In fact, the recent sharp fall in the value of the dollar is expected to eventually drive up the cost of most imported goods. That would lead directly to higher inflation and give U.S. companies more latitude to raise prices.

But companies in Europe and Japan have generally not raised their export prices to the same degree that their currencies have risen against the U.S. dollar--about 50% since mid-1985. Instead, such companies have taken smaller profits to retain their share of the lucrative U.S. market.

Still, “we should not be too euphoric about inflation,” said Sandra Shaber, chief economist for the Futures Group, a management consulting service. “With the dollar falling, that’s going to show up in higher import prices.”