Consumer prices dropped 0.4 percent in February, the steepest monthly decline in 32 years, because of falling gasoline and food prices, the Labor Department reported yesterday.

The decline in the consumer price index followed a 0.3 percent increase in January. Over the last 12 months, consumer prices have increased 3.2 percent compared with a 3.8 percent rise in 1985.

The drop in consumer prices means that Americans can buy more for their dollars. But the recent slowdown in inflation brings into doubt prospects for an automatic increase in benefits for Social Security recipients next year.

Benefits are adjusted each January based on the performance of a version of the consumer price index in the period ending the previous September. Unless inflation accelerates to about a 3.6 percent annual rate between now and September -- a prospect most forecasters think unlikely -- there will be no automatic cost-of-living adjustment next January in Social Security, Supplemental Security Income or Railroad Retirement benefits or in veterans' pensions.

The low inflation rate also will add to the problems of some sectors of the economy, such as farmers and energy concerns, and the individuals, communities and companies that depend on them.

Food prices fell 0.6 percent last month, and gasoline prices dropped 5.9 percent. Gasoline prices are 16.6 percent below their peak in March 1981, Labor said.

Fuel-oil prices for homes dropped a record 11.5 percent last month and are now 22 percent below their peak five years ago, Labor said.

The consumer price index had not fallen since December 1982, the end of the recession, and the decline last month was the sharpest since prices dropped 0.4 percent in November 1953.

White House spokesman Larry Speakes said that the CPI report, coupled with the 0.6 percent increase in Americans' personal income in February, "means that real income for the average American rose by about a full percentage point last month. All of this can be translated into a very simple message: Americans are making more money, and with inflation virtually nonexistent, they can buy even more goods and services with it."

Private economists said they expect price increases to remain moderate this year, and some economists are predicting no increase at all. Many economists are looking for consumer inflation to be between 2 percent and 3 percent.

"I would be pretty strong in arguing that low inflation is going to last, and it's a bit different than what we've had in the past," said Jerry Jasinowski, chief economist for the National Association of Manufacturers. "I think the decline in energy prices has really burst the bubble of inflationary expectations for the forseeable future."

"I started out the year forecasting inflation to be zero," said Edward Yardeni, economist for Prudential Bache securities. "This makes me more confident."

Excluding the food and energy price declines, consumer prices rose 0.2 percent last month, slightly slower than in recent months, Labor said.

Economists said lower prices probably will put more strain on farmers already suffering from depressed crop prices, and on communities dependent upon the oil business. These pressures also will be felt by financial institutions coping with farm foreclosures in the heartland and energy-related loans in the Southwest.

These problems due to low inflation "I think are very serious," Jasinowski said. " . . . In terms of the losers, you've got Mexico, you've got OPEC the Organization of Petroleum Exporting Countries , you've got money center banks, you've got energy service companies, coal producers, natural gas producers, capital spending associated with energy, oil-producing real estate. It goes on and on."

The CPI in February was 327.5, which means that goods costing $10 in 1967 cost $32.75 last month. The CPI-W, a measure used in calculating some collective bargaining agreements, Social Security benefits and some other federal programs, was 323.2 last month.

The Social Security COLA requires at least a 3 percent increase in the CPI-W from the third quarter of one year to the third quarter of the next. In 1984, the only time since the COLAs began that there was a strong possibility the 3 percent threshhold would not be exceeded, President Reagan proposed -- and Congress agreed -- to pay a COLA anyway.

Some congressional observers said they believe Congress would act again if necessary this year to pay a COLA. But pressure to reduce federal spending is greater in this election year than in 1984.

If the COLAs are not paid next year, the deficit will be reduced by about $4.2 billion, according to Congressional Budget Office estimates.

The Labor Department said prices rose last month for new cars, auto insurance, public intracity mass transit, poultry, coffee, cereal and baked goods, electricity, natural gas, medical care and entertainment. Prices fell for fresh fruits, vegetables, meats, household furnishings and clothing.

In the Washington area, energy costs fell 2.9 percent, largely due to fuel oil prices that plummeted to their lowest level since September 1980, the Labor Department said.

Area gasoline prices fell an average of 5 cents per gallon to $1.21, but it was still the second highest price of 28 areas surveyed nationally. Electricity and gas prices rose 1.6 percent, Labor said.

Area food prices dropped 0.1 percent in February, the Labor Department reported. A sharp drop in the cost of fresh vegetables, particularly lettuce and tomatoes, was offset by higher prices for coffee, fresh fruits and seafoods.

In a separate report, the Commerce Department reported that orders for manufactured products expected to last three or more years -- durable goods -- fell 0.5 percent in February following a 0.9 percent increase in January.