The consumer price index stood at 338.7 in May, meaning that the collection of goods and services covered, which cost $100 in 1967, now costs $338.70. An incorrect number for the index was given in a Wednesday story about the CPI. (Published 6/26/87)

Consumer prices rose 0.3 percent in May, the government said yesterday, the smallest monthly increase this year and only about half as much as most analysts expected.

Growth in the seasonally adjusted consumer price index slowed despite a large 0.6 percent jump in food and beverage prices. Housing, transportation and entertainment costs all went up less rapidly, and apparel prices, which had risen more than 3 percent in the previous two months, increased only 0.2 percent in May, the Labor Department reported.

Economists have been sharply divided over the outlook for inflation. Some forecasters, such as Joel Popkin, who heads a Washington consulting firm bearing his name, expect slow economic growth, small wage increases and plenty of unused production capacity to bring the inflation rate back below 4 percent later this year.

Other forecasters, particularly those who rely on previous changes in the money supply as an indicator of future inflation, predict that inflation will stay at a 6 percent rate or higher.

If inflation does subside, it could lead to lower interest rates. Rates rose sharply this spring partly because of heightened fears of inflation. One reason for those fears was the fall in the value of the dollar on foreign exchange markets, which meant that prices for many imported products would go up.

In a separate report, the Commerce Department said new orders for durable goods fell 0.1 percent in May, largely because of a 13.1 percent decline in defense orders. Excluding defense goods, orders rose 1.4 percent, and those for nondefense capital goods -- often a good indicator of future business investment -- climbed 5.8 percent.

Commerce Secretary Malcolm Baldrige noted that the latter category of orders has "stengthened appreciably this year, following three years of flat performance. The improving trend should continue with a boost from the rebound in our trade balance," he said in a statement.

During the first three months of this year, surging prices for gasoline and home heating oil and many other goods and services pushed the CPI up at an annual rate of more than 6 percent. A January rise of 0.7 percent was followed by three consecutive increases of 0.4 percent. In the latest three months, the index rose at a 4.9 percent seasonally adjusted annual rate, the department said.

In May, energy prices rose only 0.2 percent. Over the past three months, they increased at a 6 percent annual rate, and in the three months ended in Feburary at a 20 percent rate. These increases, however, simply reversed declines last year, so that last month energy prices were still 0.2 percent lower than they were in May 1986.

Overall, the CPI was 3.8 percent higher last month than it was the previous May. During that 12-month period, prices of commodities rose 3.6 percent, while those for services went up 4.1 percent. In the past three months, commodities increased at a 5.7 percent rate and services at a 4.1 percent rate.

The dollar has stabilized and regained some of its lost ground in recent weeks. As a result, some analysts now are more sanguine about the price outlook.

In yesterday's Labor Department report, the food and beverage component of the index rose 0.6 percent last month following an 0.3 percent increase in April. Grocery store prices surged 0.9 percent, the biggest monthly gain since August, the department said.

Beef and pork prices went up 3.1 percent and 2 percent, respectively, in May. During the past 12 months, beef prices have climbed 10.5 percent and pork prices 15.8 percent, the department said. Poultry prices fell 0.3 percent last month, the ninth consecutive monthly decline.

Prices for fresh fruits and vegetables, which rose 1.4 percent last month, have gone up 11.3 percent in the past 12 months.

The May increase in the CPI left the index at 413.2, meaning that the collection of goods and services covered by it, which cost $100 in 1967, last month cost $413.20.