Consumer Prices Up .3% in January : Grocery Increases Partially Offset Declines in Energy

Consumer prices rose 0.3% in January as the year began with a moderate dose of inflation, the government reported today. Higher grocery prices partially offset declines in energy costs.

The increase in the Labor Department’s Consumer Price Index was equivalent to an annual rate of inflation of 4.2%, compared to the 4.4% rise for all of 1987.

January’s increase was larger than the 0.2% rise in December and matched November’s 0.3% rise. December’s increase was revised from the previously reported 0.1%.

Widespread gains across a range of goods and services were involved in the January increase. Energy prices, however, supplied a major dampening on the overall rate by plunging 0.7% after a 0.8% drop in the preceding month.

Gasoline prices fell 1.6%; heating oil costs were down 0.8%. The price of natural gas and electricity, combined, fell 0.3%.

Food prices rose 0.3%, down from December’s 0.6% gain. Pacing January’s rise were jumps in prices for poultry, eggs and bakery products. Meat, fruit and vegetable prices declined.

Others Up 0.5%

Subtracting the usually volatile food and energy categories, consumer prices for all other goods and services rose a sharp 0.5% in January after a 0.2% increase in December.

January’s report underscored forecasts by many analysts that any significant change in the inflation rate was unlikely this year.

“The underlying rate of inflation looks to be 3% to 4%,” said Allen Sinai, chief economist for The Boston Company Economic Advisers. “The question mark is on the energy price side.”

The Reagan Administration has predicted an inflation rate of 4.3% this year.

Energy prices, which tumbled in 1986, partially rebounded through 1987. But more recently oil prices again have been falling, recently dipping below $17-a-barrel on the spot market from the $18-a-barrel prices that prevailed in December and from prices of around $19 a barrel in November.

While petroleum prices have fallen recently, analysts also said they expect to see a rise in natural gas costs.

‘May Continue to Soften’

“Energy prices may continue to soften through late spring, providing continuing offsets to food prices, which are expected to remain on an upward path,” said Donald Ratajczak, a Georgia State University economist who specializes in prices.

Supply shortages and weather and crop infestation problems, particularly in California and Arizona, have pushed up food prices in recent months. After climbing through the fall, fruit and vegetable prices fell 0.4% last month.

In a separate report issued today, the Commerce Department said Americans’ personal incomes and consumer spending both rose at moderate rates of 0.3% in January, less than half the gains posted in December.

The consumer sector is being watched closely following the October stock market collapse for signs of weakness.