Consumer Prices Up Modest 0.3 Percent in March

WASHINGTON – Consumers prices rose a modest 0.3 percent in March, largely reflecting higher energy costs. But most other prices were under control, suggesting the nation's inflation picture looks good.

The increase reported for March in the Consumer Price Index, the government's most closely watched inflation barometer, was half the size of the 0.6 percent jump registered in February, the Labor Department reported Wednesday.

Excluding energy and food prices, which can swing widely from month to month, the "core" rate of inflation was flat in March -- down from a tiny 0.1 percent rise the month before -- representing the best showing in four years.

The latest snapshot of consumer prices showed an inflation picture that was better than economists were expecting. They were forecasting a 0.4 percent increase in overall consumer prices and a 0.2 percent rise in the core rate of inflation.

For consumers, stable or falling prices are one of the few benefits of a listless economy. Faced with lackluster demand, many companies continue to find it difficult to raise product prices, economists say.

Putting aside higher energy prices, which more recently have been retreating, there were some bargains to be had for shoppers in March.

Prices for clothing fell 0.4 percent. Lodging costs -- still feeling the lingering fallout from the 2001 terror attacks and the airline industry's woes -- dropped 1.3 percent. Computer prices were down 0.5 percent and prices for telephone service declined 0.8 percent, byproducts of the battered technology sector.

Food prices edged up 0.2 percent in March, down from a 0.7 percent advance in February. Prices for fruits and vegetables were flat in March, dairy and pork prices fell, and beef and veal prices continued to rise. Beef supplies have thinned as struggling ranchers reduced herds, a principal reason for recent price increases.

Energy prices, however, went up 4.6 percent in March, on top of a 5.9 percent increase in February, as tensions related to the war in Iraq stoked prices. Gasoline prices rose 4.1 percent last month, natural gas prices jumped 14.8 percent and fuel oil prices went up 9.8 percent.

Oil prices have fallen sharply since peaking at almost $40 a barrel on Feb. 27, before the outbreak of fighting in Iraq. In trading on world markets Tuesday prices hovered in the $25 to $29-a -barrel range.

A long period of tame inflation has allowed the Federal Reserve to keep interest rates at a 41-year low of 1.25 percent in a bid to help energize the sluggish economy.

Profit pressed businesses and battered manufacturers have been reluctant to make big investments in capital projects and in hiring, a major factor restraining economic growth.

Fed Chairman Alan Greenspan and his colleagues have said they are hopeful that once the war is over, the economy will return to full health.

While businesses have largely clamped down on new spending and investment, consumers have been more energetic, lured by heavy discounting and free financing, especially on cars and other big-ticket goods.