RISING GAS PRICES FUEL LOS ANGELES INDEX JUMP.

Byline: Jason Takenouchi Staff Writer

Rising gasoline prices pulled the Los Angeles area Consumer Price Index up 0.8 percent in March, the U.S. Department of Labor reported Friday.

The month-to-month increase - which matches February's jump - was slightly ahead of the 0.7 percent nationwide rate that spurred Friday's stock market plunge. Over the last year, consumer prices rose 3.4 percent, slightly lower than the nationwide 3.7 percent increase.

The Los Angeles area's core rate - which excludes the volatile energy and food indexes and is a more accurate gauge of inflation - was up 0.2 percent for the month and 2.8 percent over the past 12 months, said the department's Bureau of Labor Statistics.

This exceeds the national rate of 2.4 percent and has been driven by growing medical care and housing costs, which increased by 3.3 percent and 3.7 percent, respectively, since March 1999.

While still low by historical standards - the annual average increase in the CPI hit the double digits in the '70s and in 1980 - some analysts said it could point to a long-term inflationary trend.

``This is not good news,'' said Jack Kyser, chief economist with the nonprofit Los Angeles Economic Development Corp. ``With what is going on with prices in general, both consumer prices and wholesale prices, you definitely can plan on another Federal Reserve interest rate hike.''

Last month, gasoline prices soared 21.2 percent. They are 38.3 percent higher than a year ago. These are the two biggest gains in the past 10 years.

Brad Williams, a senior economist at the state Legislative Analyst's Office, said the report was disturbing but does not necessarily mean the economy is heading downward for the long term.

``This is just one month's report,'' he said. ``We certainly don't see this as the harbinger, at this point, of any serious economic downturn.''

The CPI measures the change in prices for a standardized set of consumer goods and services, including food, gasoline, rent and medical care. It is the most widely used measure of inflation in the economy.

Analysts say inflation - generally considered harmful to the economy - can lead to significant changes in consumer behavior. Higher prices squeeze consumers and lead them to purchase fewer goods and services, and those lower purchases could contribute to an overall economic slowdown.

``Consumers may have less disposable income, especially low- and moderate-income people,'' Kyser said. ``That means one fewer trip to the movies, one fewer trip to a restaurant, that type of thing.''

Inflation can also have broader effects on investment and economic growth, according to Williams.

``From an economywide standpoint, it tends to create distorted incentives,'' he said. ``It would make individuals and businesses maybe put money in areas to hedge against future price increases, like in land or speculation in commodities or in gold, where it might not have the best return for the economy as a whole.''

The Los Angeles area CPI covers Los Angeles, Orange, Riverside, San Bernardino and Ventura counties. Other consumer price increases detailed in the index shows that a market basket of goods that cost $100 in 1982-84 would have cost $170.60 last month.

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Chart: RISING PRICES

Consumer prices in the Los Angeles area rose during March, in part by big gains in gasoline costs.

SOURCE: U.S. Department of Labor

Reuben J. Stern/Staff Artist