By Jeannine Aversa
The Associated Press

WASHINGTON - Prewar jitters stoked energy costs, causing consumer prices in February to register their biggest increase in two years.

With most other prices well-behaved, however, economists predicted inflation won't turn into a problem for the struggling economy.

The Labor Department reported Friday that the Consumer Price Index, the government's most closely watched inflation gauge, shot up by 0.6 percent in February - twice as fast as January's rise.

Most of February's jump came from energy, whose costs soared before the United States went to war against Iraq. The war having begun, crude-oil prices have fallen sharply.

Excluding increases in energy and food prices, the core rate of inflation inched up just 0.1 percent for a second straight month. That suggested that most other prices are under control, and the nation's inflation picture looks good.

On Wall Street, investors sent the Dow Jones industrials surging 235 points to their strongest weekly gain in more than two decades, closing at 8521.97.

The Dow and the Standard & Poor's 500 index also notched their eighth straight day of gains - the best performance in almost six years for the S&P 500 and in more than four years for the blue chips.

"Most analysts looking at the CPI report ... will conclude that the war against inflation has been won and go back to monitoring the news about the war in Iraq," said Stephen Cecchetti, economics professor at Ohio State University.

Still, higher energy prices have encouraged consumers to become tightfisted, which is slowing the economy's recovery, economists said.

With consumers paying more to fill up their tanks and heat their homes, they have less to spend on other things. Consumers also have turned cautious amid worries related to the war, a stagnant job market and a turbulent stock market. Consumer spending is a prime force keeping the economy going.

Despite February's sharp rise in energy costs, many private economists predict that if the war with Iraq is over quickly, with minimal damage to oil fields, energy prices should retreat quickly, just as they did after the first Persian Gulf War in early 1991.

Crude oil prices already have been easing in the past week.

"When it comes to oil, the fear of war drove up prices, and the actual war seems to be unwinding the gains," said economist Joel Naroff, president of Naroff Economic Advisors.

In February, before war broke out, all energy prices jumped by 5.9 percent, up from a 4 percent increase in January, the CPI report showed.

Home heating oil prices soared 15.8 percent and natural gas prices increased 5.5 percent in February.

There were some good deals out there for consumers.

Computer prices fell 2.1 percent in February. Prices for hotel rooms and other lodging dropped 1.8 percent. Prices for clothing dipped by 0.2 percent. New car and truck prices edged down 0.1 percent.

Prescription drug prices fell 0.3 percent in February. Still, those costs are up 3.7 percent from a year ago.