Consumer prices soared 1.4 percent in February for the second consecutive month, and there is no sign of an improvement soon, the government reported yesterday.
The February increase -- equivalent to an annual inflation rate of 18.2 percent -- was concentrated in energy and housing costs. Grocery prices declined for the second month in a row. Supermarket prices in Washington rose 0.6 percent [Details on Page E1].
Rising prices once again cut sharply into workers' purchasing power. The Labor Department's hourly earnings index, adjusted for inflation, fell another 0.6 percent in February. It now stands 5.3 percent below its level of a year ago.
The February price report, almost identical to the one in January that sparked President Carter's newest anti-inflation plan, intensified the administration's political problems over the economic issue.
AFL-CIO economist Rudy Oswald testified that as a result of the heightened inflation and Carter's new budget-cutting plans, labor was "giving very careful and very serious reconsideration" to its seven-month-old "National Accord" with the White House.
A withdrawal by labor leaders could prove a serious political blow to the president, who had been counting on the new pact to help him win the active support of union officials in November.
The figures came as, separately, reporters obtained copies of the president's new proposals for fiscal 1981 spending cuts, which officials had been withholding until after yesterday's New York State primary.
The list, which closely parallels recommendations made last week by the House Budget Committee, involves about $15.5 billion in reductions for fiscal 1981 and $2.5 billion in cuts for the current fiscal year, which will end Oct. 1.
In a major surprise, Carter is seeking $1 billion in proposed defense cuts -- $469 million by reducing the number of destroyer overrhauls, $351 million by cutting aircraft purchases and $183 million from paring the amount of testing.
But these figures represent reductions from a re-estimate of defense costs using a higher inflation rate than was used in Carter's January spending plan. In actual terms, defense outlays will be higher than in the January proposal.
As reported previously, Carter also is seeking $500 million in "transitional assistance" for financially strapped cities to mitigate the impact of his proposed cuts in domestic programs. But Budget Committee has rejected this.
Carter also proposed a $500 million cut in the antirecession public service jobs program, reducing the number of job slots to 149,000 from the 200,000 he proposed in his January budget.
The rest of the list was pretty much in line with the spending-cut proposals the White House worked out in negotiations with Congress earlier this month. The list includes cuts in about 70 separate programs and line items.
Carter said in his March 15 anti-inflation announcement he would propose $13 billion to $14 billion in cuts, but officials said the earlier estimate was kept low deliberately. The House Budget panel called for $16.5 billion in cuts.
The Carter administration attempted to calm fears about the inflation outlook. R. Robert Russell, director of the Council on Wage and Price Stability, said inflation probably "has peaked" and will not accelerate further.
At the same time, however, Russell conceded that despite Carter's new economic program, inflation would continue rising at close to 1.4 percent a month through late spring, and won't abate sharply later.
White House officials have conceded that Carter's new anti-inflation program, mainly budget cuts and credit-tightening, won't have much impact immediately. The plan was aimed primarily at calming the bond markets.
Moreover, Russell reiterated that the president's decision to impose a new oil-import fee will add half a percentage-point to the consumer price index for June. The fee will boost gasoline prices 8 percent that month.
As in the case of the January index, the February increase came despite a drop in food prices. Although two-thirds of the increase was in energy and housing prices, there were significant increases in virtually every category.
Here is a rundown of yesterday's figures:
Energy: Energy prices soared 5.1 percent in February, following a 4.6 percent rise in January, the result of December's sharp increases in foreign crude-oil prices. Gasoline prices leaped a near-record 7.3 percent.
Housing: Housing costs jumped 1.4 percent in February, mostly because of soaring mortgage interest rates. With housing in a slump, house prices rose more slowly than before, 0.4 percent.
Food: Grocery prices nationally declined 0.4 percent in February after dipping 0.2 percent the previous month. Moreover, this decline didn't include the impact of the recent price freeze among major chains, which began in mid-March.
Other Items: Most other prices also rose sharply. Transportation costs climbed 1.4 percent, medical costs 1.1 percent and apparel prices 0.6 percent. The biggest bargain was entertainment: prices edged up only 0.2 percent.
The February report brought the pace of inflation over the past three months to an annual rate of 17.2 percent. Consumer prices in February stood 14.1 percent above their level a year ago.
The overall consumer price index rose to 236.4 percent of its 1967 average. That means it took $236.40 to buy the same goods and services last month that sold for $100 13 years ago.
Russell's view that inflation will remain high through most of this year was shared by other economists.
Lawrence Chimerline of Chase Econometrics, a forecasting firm, predicted that consumer prices would rise at an annual rate of 17 percent during the first half of this year, slowing to about an 11.5 percent rate in the final six months of the year.
And Charles C. Holt, a University of Texas economist, warned that inflation "cannot be quickly stopped, even by high levels of unemployment." Both men testified before Congress' Joint Economic Committee.
Oswald's warning that labor might bolt the National Accord, also delivered in testimony before the JEC, was interpreted as labor's shot-across-the-bow in preparation for possibly sitting out the presidential race this year.
Oswald told the panel that as a result of the president's proposed cuts in domestic programs, "our confidence in the administration's commitment to the provisions" of the accord "has been placed in serious doubt."
He again called for the imposition of wage-price controls.