WASHINGTON - A reassuring government report on consumer prices yesterday erased any lingering bond market worries that the Federal Reserve might lift short-term interest rates.

"The Fed has no reason to tighten monetary policy at this time," said Joel Popkin, president of Joel Popkin & Co., an economic advisory firm.

The Labor Department reported that the consumer price index for May rose only 0.1%, helped by tumbling gasoline prices. The increase was less than most analysts expected and considerably less than the 0.4% increase in April that helped revive this spring's inflation jitters.

The core rate of inflation, which excludes food and energy prices and is closely watched by Fed officials, was up only 0.2%, half of the 0.4% gain in April.

The latest figures, coming on the heels of Friday's report from the. Labor Department showing that producer prices in May were unchanged, added to market confidence that inflation is not getting out of control.

President Clinton said in a White House press conference, "we've had, since last Friday, very good reports on lower inflation in terms of both producer prices and consumer prices."

Clinton said the downturn in long-term interest rates is fueling gains in sales of new homes and "mightily contributed" to 750,000 new jobs in recent months. Continuing this trend "depends on our ability to pass a strong economic program through the Congress which reduces the deficit," he said.

Economists said the consumer price report backed up assertions made by administration officials that the price gains recorded earlier in the year were aberrations. "We ready are in more the 2 1/2% to 3% inflation mode," said Carol Stone, senior economist for Nomura Securities International Inc.

Stone said she expects Fed policymakers to hold rates steady and possibly consider reversing their reported bias toward a tighter monetary policy back to a neutral policy directive on rates. "The economy is at best moderate," she said. "Housing is good, but manufacturing is still weak. "

The Federal Open Market Committee is scheduled to meet July 6 and 7 to review rates in its last meeting before chairman Alan Greenspan goes before Congress to deliver the central bank's semiannual monetary policy report.

Popkin said that he does not expect the Fed to tinker with its policy formula "based on one month's data." While the economy may remain soft in the second quarter, he suggested, more rapid growth in the range of 3% to 4% in the second half of the year will revive inflationary pressures.

Popkin estimates that for all of 1993, consumer prices will rise 3 1/2%, which would be a significant increase from the 2.9% recorded last year. It is all the more worrisome to Fed officials who were projecting inflation to decline another notch this year, he said.

Yesterday's Labor Department report showed that price increases moderated for a wide range of goods and services.

Housing prices, which some analysts feared might prove a wild card that would push up the overall index, were up only 0.1% after a hefty gain of 0.5% in April. Prices of food and beverages rose 0.4%. the same as the month before.

Clothing store prices actually fell 0.5% after showing no change in April, reflecting larger-than-usual sales on spring and summer clothing, officials said. Entertainment prices slipped 0.2%, the first decrease all year.

Energy prices tumbled 1% as gasoline prices dropped 2.5%. Overall, the transportation index rose a modest 0.2% as prices for new cars edged up slightly and financing charges fell.

The main sour note in the report was in medical care prices, which advanced 0.8% after a large gain of 0.6% in April.

For the first five months of the year, consumer prices rose at an annual rate of 3.8%. That is still well above projections of Fed officials and most private forecasters, but down from the 4.3% pace recorded through April.

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