FUEL COSTS IGNITE INFLATION JUMP IN PRICES BIGGEST IN DECADE.

Byline: Gregory J. Wilcox Staff Writer

A huge increase in energy prices boosted the Los Angeles area's inflation rate 3.7 percent last year, the biggest annual gain since 1990, the government said Wednesday.

The index measuring natural gas utility service ballooned a whopping 58.4 percent over the past 12 months while the index for regular gasoline soared 18.1 percent, said the U.S. Labor Department's Bureau of Labor statistics in a report covering Los Angeles, Ventura, Riverside, San Bernardino and Orange counties.

``It's a huge increase,'' said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., a nonprofit group that tracks business trends in the region. ``When you look at everything in there you do see a major problem.''

The last time the region saw a jump like this was in 1990, when inflation increased 5.9 percent on an annual basis.

Even the core inflation rate, which does not include the food or energy index, rose 2.7 percent over the past year.

That's a bigger jump than the all-inclusive rate made each year between 1993 and 1999.

It's cause for concern on two fronts: higher prices strips money from the disposable income stream and erodes consumer confidence.

``This is putting a squeeze on the consumer,'' Kyser said. ``You've had a period of really benign inflation and now all of a sudden you're seeing some definite pressures and relief may not come anytime soon.''

While the month-to-month picture is less alarming, there have been significant price gains in the past 12 months.

For example:

--Gasoline prices fell 5.4 percent in December but are up 16.2 percent over the year.

--Food and beverage prices rose 1.1 percent month over month and are up 3.9 percent for the year.

--Housing and shelter costs increased 0.2 percent in December on a monthly basis but jumped 4.6 percent and 3.9 percent, respectively, over the year.

The housing index made its biggest jump for a 12-month period since May 1991, the government said.

Last year the median price for a single-family pre-owned home in Los Angeles County was $199,000, a record, according to DataQuick Information Services.

Those prices are likely to keep climbing since demand is strong and supplies tight, said John Karevoll, a DataQuick analyst.

The consumer price index for the region is now at 173.5, meaning a market basket of goods costing $100 in the 1982-1984 time period would fetch $173.50 in December.

Karevoll notes that inflation can be a good thing for property owners.

``It's one of the things that goes up with inflation. If you are a homeowner during an inflationary cycle you will probably be on top of it,'' he said.

Brad Williams, chief economist in the state's Legislative Analyst's Office, is not surprised by the report, noting that California has experienced a lot more pressure on prices than the rest of the country from a lot of different quarters.

``Even as the national economy has slowed over the last half of 2000 the . . . economy here continued to expand at a rapid pace and these pressures are coming home to root,'' Williams said.

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Chart: RISING PRICES

A huge increase in energy prices resulted in the biggest jump in inflation for Los Angeles County in 10 years.

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