The consumer price index rose 0.9 percent in May, the fourth month in a row that inflation has continued at or near a "double-digit" pace, the government reported yesterday.
Prices in the Washington metro politan area rose 1.7 percent from March to May, an increase slightly below the national average. The biggest cost items in the area continue to be housing and related expenses, [Story, D8].
Beef prices, which had led the index in recent months, rose less than earlier this year. But other prices picked up the slack, suggesting that inflation is now spreading into nonfood sectors of the economy and that it may not abate as soon as the administration has predicted.
The report came as a jolt to the Carter administration, which had been counting on a decline in the inflation rate to help persuade the Federal Reserve Board to stop raising interest rates, a policy some tear could bring recession.
If prices continue to rise for 12 months at their pace in May, it would mean an annual inflation rate of 11.9 percent.
Over the past six months, the consumer price index has risen at an annual rate of 9.4 percent. By contrast, retail prices rose 6.8 percent in 1977. Administration economic advisers have predicted that the inflation rate this year will be about 7 percent.
Treasury Secretary W. Michael Blumenthal conceded to a luncheon group that the latest figures "are not good" and "obviously we are disappointed with the figures." However, he forecast a further slowing of food prices by July.
Most disturbing to economists was that the overall inflation rate did not case in May, despite the slowdown in food and beef prices - indicating an acceleration of prices for a broad range of other goods and services.
Beef prices rose 2.5 percent in May - exceptionally high by historical standards, but still far below the record 6.6 percent leap in April. Overall food and beverage prices rose 1.5 percent, down from 1.8 in April.
The report came too early to reflect the turnaround in livestock prices that occurred in early June. However, analysts said the peaking of cattle prices recently may not show up at the retail level until sometime next fall.
Meanwhile, the Agriculture Department reported separately that prices received by farmers slowed during June to half the pace of the three previous months, rising by 1.5 percent, compared to 3.5 percent in May.
The June jump mainly reflected higher prices for cattle, apples, broilers and potatoes. Prices for eggs and soybeans declined, however. Still, farm prices were 18 percent above their level a year ago.
The department also reported that farmers are planting slightly more acres than expected in such key crops as corn, wheat and feed grains, amounting to 3 percent less than in 1977, but still above this year's targets.
Agricultural economists said neither set of figures would change the department's predictions that food prices would rise by 8 to 10 percent this year, which the agency revised upward early last spring in the face of a cattle shortage.
However, farm experts said the combination of reports suggested no additional food-price increases were likely. The acreage reports were based on a survey taken June 1, and could change as a result of bad weather.
The slowdown in beef prices in May was offset by sharper price increases for other food items - notably fresh fruits and vegetables - and by hefty increases in prices of other goods and services.
Housing costs nationally rose a steep 1 percent in May, marking the third such increase in a row. And transportation costs jumped 0.7 percent, in part because of a one-time boost in new car prices.
The only major bright spot was in apparel prices, which rose 0.6 percent in May, following increases of 1 percent in March and April. But shoe prices soared by 0.9 percent, their sharpest rise this year.
The May figures brought the overall consumer price index to 193.3 percent of its 1967 average. That means it took $193.30 last month to buy the same goods and services that cost $100 11 years ago.