Fuel Oil Fall Offsets Clothing Rise, Holds Inflation to 0.5%

A record increase in clothing costs helped push consumer inflation to a brisk 0.5% in February, despite the biggest one-month drop in fuel oil prices in 55 years, the government said today.

The gain in the Labor Department’s Consumer Price Index came on top of a huge 1.1% rise in January, the steepest in 7 1/2 years.

(Consumer prices in the Los Angeles area surged 1.1% in February for the second straight month, with price hikes in a wide variety of sectors, the Labor Department said. The increase in inflation for the region--which includes Los Angeles, Orange, Riverside, San Bernardino and Ventura counties--matched January’s 1.1% gain and brought the area’s prices to 6.5% above the year-ago level.)

A turn-of-the-year cold snap sent energy and food costs soaring nationwide in January. Fuel oil prices recovered with warmer-than-usual temperatures in February.

However, food prices are taking longer to snap back and clothing costs posted the largest seasonally adjusted monthly rise in 43 years, accounting for about two-fifths of the overall gain.

“It’s a nasty little number, worse than we thought it would be,” said economist Robert Brusca of Nikko Securities Co. International Inc. “The problems we had in January still appear to be lingering in February.”

Taken together, the first two months of the year represent an annual inflation rate of 9.9%. However, most analysts expect a succession of milder reports this year and look toward a 1990 rate just under last year’s 4.6%.

“The economy is too strong for inflation to go down, but it’s still . . too weak for inflation to really be rising very much,” said economist Bruce Steinberg of Merrill Lynch.

In a related report, the Labor Department said U.S. workers’ earnings rose 0.3% in February after adjustments for inflation and seasonal factors. That followed a 1.2% drop in January, much steeper than an earlier government estimate of 0.7%.

In advance, most analysts had been expecting only half as much inflation as was reported for February.

Energy prices overall were down 0.7% last month following a 5.1% gain in January.

The department said fuel oil, which advanced 26.3% in January, fell back 18.7% in February, a record since 1935 when the government first began tracking the price.

Gasoline rose 0.8% after a 7.7% rise. Natural gas and electricity rose 0.6% after a 0.3% increase.

Food costs rose 0.5% in February after a large 1.8% rise in January.

Dairy products rose 0.9%. So did fruit and vegetables, following a 10.2% rise in January after a freeze ruined crops from Texas to Florida.

Tomatoes jumped 30.7% in February. For the two months combined, they were up 129.4%.

There were declines for sugar and sweets and fats and oils.

Excluding the volatile food and energy categories, prices rose 0.5%. This “core” number is generally considered a better indication of underlying inflation pressures.

However, it was driven higher by an unusual 3.3% rise in clothing and upkeep prices. On a seasonally adjusted basis, it was the sharpest rise since 1947 when that series of numbers was first recorded.

A department analyst said spring fashion lines were introduced earlier in the year than normal, throwing off the department’s statistical adjustments.