ACCORDING to the Bureau of Labor Statistics, the cost of living rose 11.3 percent in 1979. People on welfare in the District had to absorb most of that increase out of their own pockets. The District government gave them only a 5 percent increase in welfare payments this year. This is less than half the increase in the cost of living from the previous year. In the budget for the fiscal year beginning Oct. 1, the District Government had planned to include another 5 percent increase in welfare payments. But now that has been scuttled. An amendment by Mayor Barry to the city's proposed budget for next year has eliminated any increase in welfare payments as part of the plan to cut city spending because of this year's budget crisis. As a money-saving step, the cut in welfare payment increases seems unfair. It takes money from people who have the least money to spare.

Cutting the increases in payments to the city's approximately 30,000 welfare cases will save the District government about $3 million out of a total city budget of over $1 billion. And that is a tiny sum in relation to the city's prospective deficit for this year, now thought to be about $170 million. But to poor people this money can make a really big difference. One reason is that the federal government matches, dollar for dollar, the money that local governments put into welfare.The $3 million increase in the District's budget for welfare would have resulted in a $6 million increase in the money available to the city's poorest people. In actual dollars, the difference to a been $17.44, or the difference between the $348.73 the family now receives monthly and the $366.17 they would have received with proposed increase.

Any plea not cut a part of the District's budget is made with full knowledge that the city treasury is short of dollars. Real cuts, even very painful ones, must be made in this year's and next year's budgets to keep the city from overspending. But to deny a few more dollars to people on welfare in the face of the ever-rising cost of living seems unusually harsh. It is especially harsh because the increase is so small and inflation has been far ahead of any increase in welfare payments for the last 10 years. An added consideration is the high price of living in the Washington area. To refuse to make some effort -- and a 5 percent increase is a small effort -- to increase monthly welfare payments is a bad economy.