Gasoline Fuels 0.7% Leap in Consumer Price Index for April

A record increase in gasoline prices fueled a large 0.7% jump in consumer inflation in April, the government said today.

Last month’s climb in the Labor Department’s consumer price index followed advances of 0.5% in March and 0.4% in February. It was the steepest one-month increase since an identical 0.7% rise in January, 1987.

For the first four months of the year, inflation at the retail level ran at a 6.6% annual rate, sharply higher than the 4.4% annual increases in both 1988 and 1987.

Analysts said most of the momentum this year is coming from a 30% rise in crude oil prices. Once that works its way through the economy, analysts expect inflation to fall back to a 5% annual rate.

In April, energy accounted for about 60% of the increase. The Labor Department said the 11.4% rise in gasoline prices was the largest one-month gain since the agency began keeping track of prices in the 1930s. The previous record was 7.4%, hit in January, 1987, and in March, 1974.

The 5.1% advance for all energy costs also set a record and followed a 1.1% rise in March.

‘Like a Bulge’

White House spokesman Marlin Fitzwater, noting that heavy influence of energy on the report, told reporters traveling with President Bush to Rochester, N.Y., “We think it’s kind of like a bulge moving through the economy. Other than energy prices, inflation looks like it’s in pretty good shape.”

The rate of inflation excluding the volatile food and energy sectors, which analysts say is often a better measure of underlying inflationary pressures, rose only 0.2% in April. The comparable figures were 0.5% in March and 0.4% in February.

In a separate report, the Labor Department said Americans’ average weekly earnings, after adjusting for inflation, increased 1.2% in April after falling 0.3% a month earlier.

Average weekly earnings in April, before adjusting for inflation, were $334.08, up 4.3% from a year earlier. Taking the 5.3% inflation rate for urban workers into account over the 12-month period, real weekly earnings were down 0.9%.

In the price report, the department said food and beverage costs rose a moderate 0.5%. Fats and oils were up a sharp 1.0%, but sugar and sweets fell 0.1%. Meats and poultry, dairy products, baked goods and fruits and vegetables all rose.

The Labor Department offered these other details on price changes in April:

--Apparel rose a modest 0.3% after jumping 1.4% a month earlier.

--Medical care was up 0.5%, the same as in March.

--Entertainment climbed 0.6%, double the March rate of 0.3%.

--Transportation costs, reflecting gasoline hikes, rose 2.1%, the sharpest in nearly seven years. Gasoline was offset somewhat by a slight 0.1% rise in new car prices and a 0.3% decline in used car prices.

--The cost of services, one sector not tracked by the wholesale price index, rose a modest 0.2% in April despite a tight labor market.

Economist James Annable of First National Bank of Chicago said April’s energy jolt will probably be the worst for quite a while.

“When you hear oil prices are going up, it usually takes about three months for most of the effect to show up in consumer prices. We’ll get some more in (May), and then we’ll get dribs and drabs,” he said.