Consumer prices and retail spending rose moderately in March, the government said Wednesday, potentially easing fears that the economy's recovery will spark renewed inflation.
The Labor Department said the consumer price index inched up 0.3% for the second straight month, with increases in the cost of housing and clothing accounting for nearly half the upturn. The rise was in line with economists' predictions. The department also said weekly earnings of U.S. workers rose 0.9% in March to $383.09, after falling 1.5% in February.
Separately, the Commerce Department reported that retail sales rose 0.4% in March, with sales totaling a seasonally adjusted $182.3 billion.
In the five-county Southern California region, consumer prices edged up 0.2% last month, leaving them just 1.8% higher than in March, 1993. The government said higher clothing and private transportation costs more than offset lower costs for housing and personal care throughout Los Angeles, Orange, San Bernardino, Riverside and Ventura counties.
For the first three months of the year, the annual inflation rate was 2.5%, compared to 2.7% for the same period in 1993.
Economists said that the latest rise in the consumer index should be considered the second bit of reassuring inflation news in two days. On Tuesday the Labor Department reported that wholesale prices were in check in March, increasing just 0.2%. For the full first quarter of 1994, they increased at an annual rate of 3.9%.
Analysts said the inflation figures could help hold down short-term interest rates for a while. But some said they still expect the Federal Reserve Board, looking further down the road, to move again this spring to tighten the money reins.
Analysts said the modest increase in consumer spending suggested that the economy would continue to grow modestly.
Consumer spending, two-thirds of the nation's economic activity, expanded at a 4.4% rate in the final three months of 1993. Retail sales represent about half of consumer spending.
Commerce Secretary Ronald H. Brown said the report suggests that "consumer spending is growing at a sustainable pace consistent with the balanced recovery now under way."
Sales last month were 8.9% higher than in March, 1993, when blizzards buried much of the nation and kept shoppers at home.
Automobile sales were up just 0.5% in March, compared to 2.6% in February.
Shaber and other analysts contended that previously reported increases in unit sales suggested the government's figures will be revised upward.
Energy prices, which had shot up a revised 1.6% in February, advanced 0.4% in March with the arrival of spring and milder weather. Food prices rose 0.1% in March, following two straight months of declines. The cost of medical care rose 0.2% in March, matching the smallest increase in a decade.
Seasonally adjusted, in billions of dollars:
March, '94: $182.3
Source: Commerce Department
Consumer Price Index
Percent change from prior month, seasonally adjusted:
Feb., '94: +0.3%
Source: Labor Department