Consumer Prices Rise 0.2%, Easing Inflation Concerns : Economy: The trend toward lower inflation was evident almost across the board in September, including housing, transportation and food.

Consumer prices increased a scant 0.2% in September, the Labor Department reported Thursday, soothing inflationary fears and raising hopes that the Federal Reserve Board might allow interest rates to fall.

The September increase in the consumer price index was only about half as large as expected by financial markets. Providing additional encouragement, the Labor Department said consumer prices rose at an annual rate of only 1.6% for the entire third quarter.

During the past 12 months, consumer price inflation has averaged 4.3%.

The September inflation statistics had been awaited anxiously in the wake of last Friday’s report of a hefty 0.9% gain in wholesale prices in September. That report came the same day as a 190.58-point plunge in the Dow Jones industrial average.

The latest report pushed Wall Street the other way. The Dow average jumped 39.55 points Thursday.

Inflation was a pervasive concern earlier this year, as the CPI marched inexorably higher at an annual rate of more than 6% through May. The trend reversed in June, with food prices stabilizing and energy prices declining.

The trend toward lower inflation was evident almost across the board in September. Housing-related prices rose only 0.2%, constrained by lower fuel prices and by a 4.5% cut in hotel rates after the summer tourist season. Transportation prices fell 0.5%, pushed down by lower fuel costs, reduced sticker prices for autos and lower finance charges. The price index for services, excluding medical care, rose only 0.1%.

Food costs were up a moderate 0.2% in September. And gasoline prices at the pump fell 2.2%, even though they rose 10.6% at the wholesale level. Household fuel costs were unchanged at the retail level, despite a 16.3% wholesale increase.

The underlying “core” rate of consumer inflation, which excludes food and energy, was 0.2% for the month, the same as the overall rate.

Medical care rose 0.8% in September and appears likely to continue increasing. During the past 12 months, medical costs have increased 8%, and the annual rate jumped to 9.2% in the third quarter.

“Once again, medical care is the bad guy,” said Irwin L. Kellner, an economist with Manufacturers Hanover in New York. “That 8% year-over-year (increase) seems unbelievable when you see what is going on in the rest of the world.”

Kellner said the September CPI report continues a trend that has been under way for some time. “Consumers have learned to just say no, and they won’t pay higher retail prices,” he said.

Before seasonal adjustments, inflation in the Los Angeles-Orange County metropolitan area leaped ahead 0.9% in September, in contrast with a nationwide unadjusted rate of 0.3%. During the past 12 months, consumer prices in the Southern California region have risen 5.4%, compared to 4.3% nationally.