Consumer prices in metropolitan Washington rose 1.7 percent over the two-month period from March to May, slightly below the national average increase, the Labor Department reported yesterday.
The area price increases matched a trend of accelerating inflation across the country, however, after more modest gains of 0.7 percent from January to March and 1.1 percent in the November-January period here.
Moreover, in the 12 months ended with May, Washington area consumer prices were up 8 percent compared with a national average of 7 percent. All figures are not adjusted to reflect normal seasonal variations in prices, however.
The statistics released yesterday indicate that area prices now are rising at a rate that exceeds 10 percent on an annual basis.
[In a separate report, the Virginia Employment Commission said yesterday that the state's rate of unemployment dropped to 4.5 percent in May from 4.8 percent in April, spurred by increased construction work. The Virginia rate was well below the national average of 5.5 percent in May and 5 percent in Virginia during the same month last year.]
Fueling the area inflation are soaring costs for housing, transportation and food.
The most important expenditure for Washington area residents is housing - mortgages, taxes, insurance, fuel, utilities, rent and home furnishings - accounting for 46.7 percent of average consumer spending.
Basic housing costs in the area jumped 4.1 percent in the past two months alone and 10.8 percent in the recent 12 months. But the costs of home ownership rose far more rapidly than for persons who rent housing.
Ownership increases were 5.5 percent for the past two months and 13.7 percent since May 1977, compared with rental cost increases of 0.5 percent in the March-May period and 8.8 percent for the full year.
A key element in the cost rise for home ownership is interest charged for new home mortgages - now hovering at about 10 percent throughout the region and apparently headed higher. The D.C. Council voted 11.1 this week to increase to 11 percent the ceiling on home mortgages, for a 90-day period.
New mortgage agreements had become scarce in D.C. because of a 10 percent interest rate ceiling that was about to be reduced to 8 percent. Maryland has a 10 percent ceiling, which has halted most home mortgage lending. In Virginia - which has no ceiling - mortgage lending has continued.
All interest rates have been rising steadily this year and Washington area banks yesterday joined larger institutions across the country in announcing a 9 percent prime interest rate - that charged to best corporate customers. Although other interest charges are not tied to the prime rate, mortgage and consumer loan rates tend to be increased after corporate loan costs are increased.
In addition to interest rates, prices for new and older homes have been increasing here at an annual rate of more than 12 percent. The Labor Department report also noted recent price increases for natural gas service, housekeeping services, supplies and most home furnishings.
Although fuel and utilities prices rose 5.7 percent over the past 12 months, the cost of electricity in the area actually declined in the March-May period.
According to the National Association of Regulatory Utility Commissioners, residents of the Washington area experienced one of the lowest increases in electricity costs across the nation in the past year. A survey showed price increases here for 500 kilowatt-hours were 2.19 percent between April 1977 and April 1978.
Transportation costs rose 1.7 percent in the March-May period, because of higher prices for new and used cars, gasoline, tires and repairs and maintenance. On an annual basis, private transportation costs have increased 3.2 percent and public transportation costs are up 6.3 percent - reflecting increased Metro bus and subway fares.
About 17 percent of local consumer expenditures are allocated to automobiles, gasoline, repairs and public transit.
Another 17 percent of the consuer's dollar goes for food (10 percent for grocery store purchases, 5.6 percent at restaurants and 1.3 percent for alcoholic beverages).
From March to May, overall food prices rose 3.1 percent - grocery store prices 4.1 percent and restaurant prices 1.5 percent. Reflecting the national food situation, prices here increased for beef, fresh fruits and vegetables, poultry, fish, seafood, carbonated drinks, fats and oils. There were lower prices for eggs, roasted coffee and pork.
Labor Department figures indicated that most recent food prices increases occurred in April, followed by a slower rate of inflation in May. Exceptions to this pattern were fruits and vegetables, for which prices soared 5.4 percent in May compared with 2.8 percent the previous month.
Among other spending categories in the local consumer price index for the recent two months, prices of apparel rose 1.8 percent becaue of higher cost of jewelry, luggage and women's apparel. Prices rose moderately for tobacco and declined for entertainment and medical care in the past two months.