WASHINGTON -- Inflation had a mild uptick in January just as the industrial economy was clearly starting to slow down from its breakneck 1994 pace, government reports showed yesterday.
Consumer prices climbed 0.3 percent, the most since summer, as housing costs accelerated, and clothing, air fares and home furnishings turned up after prolonged declines.
Ignoring the erratic food and energy components, the price index rose an even faster 0.4 percent. Nevertheless, economists remained calm and Wall Street paid more attention to a rise of 0.4 percent in industrial production for January that confirmed a welcome letup in the economic growth.
After an initial setback, the bond market advanced and helped propel the stock market, as gauged by the Dow Jones industrial average, to a record, flirting with the 4,000 mark.
"Inflation should start ticking up modestly, but I don't see any major rise," said Mickey D. Levy, chief financial economist at NationsBank in New York. He described the economy as having begun a classic slowdown, with housing and retail sales already softening.
For months, price pressures have been building at various stages of the production process, and it has been widely assumed that at least some of this would eventually reach consumers at the end of the pipeline, despite a yearlong drive by the Federal Reserve to head off an inflationary surge.
Analysts were reassured yesterday not only by a halving of industrial output growth from the November and December pace, but also by a negligible 0.1 percent rise in the operating rates of both factories and U.S. industry as a whole, suggesting that capacity is not being strained unduly.
Still, the rise in the so-called core inflation was the most for a single month since October 1992, and it remains possible, analysts said, that the Consumer Price Index will rise this year by more than the half-point that is widely projected -- to about 3.25 percent from 2.75 percent.
In the Baltimore metropolitan area, the regional CPI rose by 0.1 percent from November to January. The Bureau of Labor Statistics measures regional prices every two months.
Transportation costs, which were up 0.7 percent, led the increase, more than offsetting a 3.1 percent decline in apparel and cosmetics costs and an 0.2-percent decline in housing.
Also higher during the two months were entertainment, up 1.6 percent, and food and beverages, up 0.3 percent. Medical care costs were unchanged.
Nationally, it was the housing component, which accounts for 41 percent of the index, that had the biggest impact; it rose 0.4 percent following no change in December. Rents, utilities, maintenance and repairs, cable television and local telephone charges all climbed, and the 10.3 percent rise in postage rates -- part of household operations -- was also included here.
Apparel prices surged 0.7 percent after falling for three straight months, reflecting earlier-than-usual discounting of cold-weather clothing, which meant smaller discounts in January, the Department said.
Much of a rise of 0.6 percent in transportation charges last month was from a 2.2 percent jump in airline fares after four straight declines at the end of 1994 totaling 10.8 percent.
Another jump in automobile finance charges, 4 percent in January, and a 2.6 percent rise in used-car prices also lifted the price index.
Services, which make up about 57 percent of the index, jumped 0.5 percent last month, while commodities, at 43 percent, edged up 0.1 percent.
The Federal Reserve's production report showed that the nation's factories, mines and utilities operated at 85.5 percent of capacity last month, up one-tenth of a point, another 15-year high.
The rise of 0.4 percent in output compared with increases revised yesterday to 0.8 percent and 0.9 percent, respectively, for November and December.