Consumer prices jumped another 1.1 percent again in August, as big increases in gasoline and home ownership costs far more than offset a small drop in grocery store prices, the Labor Department reported yesterday.
The Consumer Price Index (CPI) has risen 1 percent or more every month since January. The CPI is up 11.8 percent since August 1978, and has been going up at a 12.7 percent rate in the last three months.
"The struggle against inflation is not going very well," presidential inflation adviser Alfred E. Kahn conceded, but, he added, "It's not going as badly as people think."
Kahn, speaking at the National Business League Convention in New Orleans, predicted that "inflation will be out of double digits by the end of the year."
"If we don't get inflation out of double digits . . . obviously, it's going to mar [President] Carter's chances [for reelection]," Kahn said.
The Labor Department said gasoline prices jumped another 3.7 cents a gallon last month, pushing the average price for all grades to 96.7 cents a gallon so far this year.
Grocery store food prices, which fell 0.3 percent nationally in August, dropped even more, 0.5 percent, in the Washington area. Locally, such prices declined 0.6 percent in July, compared with 0.1 percent nationally.
Meanwhile, the Commerce Department's earliest estimates show that the economy expanded at more than a 1 percent annual rate in the third quarter, after a 2.3 percent rate of decline in the previous three months. [Details on Page D7.]
Administration economists anticipate that there will be another drop in economic activity in the fourth quarter. That expectation, and a likely slowdown in the pace of energy price hikes, are the reasons Kahn says he believes that the rate of inflation will drop out of the double-digit range before the end of the year.
At the same time, the three-month food price decline probably ended last month, the Agriculture Department's chief economist, Howard Hjort, said. He predicted that food prices would be up 0.5 percent in September, and that they would rise between 7 percent and 12 percent during 1980.
Hjort said he expects food prices to rise 11 percent this year and probably somewhat less than that next year.
"The weather gods have a great deal to say about what the final outcome is on retail food prices, but, given our current and prospective supply-and-demand situation, for meat in particular, we should not see the kind of increase in meat prices that we have seen in 1979," Hjort said. "Therefore, we should not see a rate of increased food prices that would be as large as this year's."
Hjort said the recent declines in retail food prices are "our first clear signal that the retail establishments are reducing the price spreads from what previously were unacceptable levels. The decreases [in farm prices] are being passed through to the customers."
President Carter met in mid-August with food industry officials to express concern that consumers were not getting the full benefit of falling farm prices.
With the recent sharp declines in the cost of beef, poultry and pork, grocery store prices are now up 9 percent since August 1978.
On the other hand, the average price of a gallon of fuel oil was 80 cents in August, up 4.8 cents from July and up 25.5 cents since last December. The average price in Washington last month was 83.8 cents, second only to Buffalo, among the 15 cities in which fuel oil prices are sampled by the Labor Department.
Strikingly, the lowest average price reported was in Baltimore, where it was exactly 10 cents a gallon less than in Washington.
Gasoline prices have risen 46 percent in the last 12 months, the department said. In August, the national average for leaded regular was 94.3 cents, for unleaded regular 98.8 cents, and for leaded premium $1.004. The comparable figures for the Washington area were 92.3 cents, 96.9 cents, and 96.2 cents.
The costs of home ownership included in the CPI -- purchase prices, financing, taxes, insurance, maintenance and repairs -- rose 1.7 percent in August, in part because of continued increases in mortgage interest rates. Such costs have risen 16 percent in the last 12 months.
If the effects of higher mortgage interest rates were not included in the CPI, it would have risen 10.6 percent since August 1978, instead of 11.8 percent.
The August increases left the overall index at 221.1, meaning that goods and services that cost $10 in 1967, the base year, now cost $22.11.