Consumer Price Index Summary
FOR TECHNICAL INFORMATION:
Patrick C. Jackman (202) 691-7000 USDL-00-234
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INTERNET ADDRESS: Wednesday, August 16, 2000
http://stats.bls.gov/cpihome.htm
CONSUMER PRICE INDEX: JULY 2000
The Consumer Price Index for All Urban Consumers (CPI-U) increased
0.2 percent in July, before seasonal adjustment, to a level of 172.6 (1982-
84=100), the Bureau of Labor Statistics of the U.S. Department of Labor
reported today. For the 12-month period ended in July, the CPI-U
increased 3.5 percent.
The Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W) rose 0.1 percent in July, prior to seasonal adjustment. The July
level of 169.3 was 3.7 percent higher than the index in July 1999.
CPI for All Urban Consumers (CPI-U)
On a seasonally adjusted basis, the CPI-U rose 0.2 percent in July
after increasing 0.6 percent in June. The energy index, which advanced 5.6
percent in June, rose 0.1 percent in July. A 2.0 percent increase in the
index for energy services was largely offset by 1.6 percent decline in the
index for petroleum-based energy. The food index advanced 0.5 percent in
July, following a 0.1 percent increase in June. The index for food at
home rose 0.7 percent, reflecting increases of 1.0 percent each in the
indexes for fruits and vegetables, for cereals and bakery products, and
for nonalcoholic beverages. Excluding food and energy, the CPI-U rose 0.2
percent in July, the same as in each of the previous three months.
Table A. Percent changes in CPI for All Urban Consumers (CPI-U)
Seasonally adjusted Un-
Compound adjusted
Expenditure Changes from preceding month annual rate 12-mos.
Category 2000 3-mos. ended ended
Jan. Feb. Mar. Apr. May June July July '00 July '00
All Items .2 .5 .7 .0 .1 .6 .2 3.6 3.5
Food and beverages .0 .4 .1 .1 .5 .1 .5 4.6 2.7
Housing .3 .5 .4 .1 .2 .5 .4 4.6 3.5
Apparel -1.1 .2 .3 -.5 -.2 -.6 -1.0 -7.2 -2.2
Transportation .1 1.3 2.5 -.7 -.5 1.8 -.3 4.5 7.1
Medical care .3 .4 .5 .3 .3 .4 .3 4.2 4.1
Recreation .2 .0 .4 .0 .3 .3 .3 3.6 1.5
Education and
communication .5 -.5 .0 .0 .1 -.1 .6 2.4 1.6
Other goods and
services .6 .8 .5 1.4 -.6 -.2 1.0 .6 5.4
Special Indexes
Energy 1.0 4.6 4.9 -1.9 -1.9 5.6 .1 15.6 19.3
Food -.1 .4 .1 .1 .5 .1 .5 4.6 2.6
All Items less
food and energy .2 .2 .4 .2 .2 .2 .2 2.2 2.4
See page 4 for a note on the use of hedonic models to adjust prices of
selected products in the CPI for changes in quality.
During the first seven months of 2000, the CPI-U rose at a 4.0
percent seasonally adjusted annual rate (SAAR). This compares with an
increase of 2.7 percent for all of 1999. The acceleration thus far in
2000 largely has been due to energy costs, which increased at a 22.6
percent annual rate in the first seven months of 1999 after advancing 13.4
percent in all of 1999. Food costs, which rose 1.9 percent in 1999, have
risen at a 2.8 percent SAAR in the first seven months of 2000. Excluding
food and energy, the CPI-U has advanced at a 2.6 percent rate compared
with a 1.9 percent rise for all of 1999.
The food and beverages index increased 0.5 percent in July. The
index for food at home, which rose 0.1 percent in June, increased 0.7
percent in July. Most of the major food at home groups contributed to the
acceleration in July. The indexes for cereals and bakery products and for
fruits and vegetables, each of which declined 0.7 percent in June, turned
up in July, each advancing 1.0 percent. The index for nonalcoholic
beverages also increased 1.0 percent, reflecting a 1.5 percent rise in the
index for carbonated drinks. Within the fruits and vegetables group, a
3.2 percent increase in the index for fresh fruits more than offset a 0.7
percent decline in the index for fresh vegetables. The index for
processed fruits and vegetables rose 0.3 percent. The index for dairy
products turned up in July, advancing 0.6 percent, largely as a result of
a 1.2 percent increase in milk prices. The index for meats, poultry,
fish, and eggs rose 0.5 percent in July, the same as in June. In July, the
indexes for pork and for poultry turned up, increasing 0.8 and 1.6
percent, respectively. The index for beef, which had risen 0.9 percent or
more in each of the preceding 5 months, rose 0.1 percent in July. The
index for other food at home was the only major grocery store food group
to advance less in July than in the previous month, rising 0.2 percent
after increasing 0.4 percent in June. The other two components of the food
and beverages index--food away from home and alcoholic beverages--
increased 0.3 and 0.6 percent, respectively.
The index for housing increased 0.4 percent in July, following a 0.5
percent rise in June. The index for fuels and utilities rose sharply for
the second consecutive month, advancing 1.6 percent in July after rising
2.2 percent in June. The index for natural gas, which rose 7.8 percent in
June, increased 3.8 percent in July and has risen 20.1 percent in the
first seven months of 2000. The index for electricity increased 1.1
percent in July. The index for fuel oil increased 1.5 percent in July and
has risen 45.4 percent over the past 12 months. Shelter costs, which rose
0.4 percent in June, increased 0.2 percent in July. Within shelter, the
indexes for rent and for owners' equivalent rent rose 0.4 and 0.2 percent,
respectively, while the index for lodging away from home declined 0.5
percent. (Prior to seasonal adjustment, the index for lodging away from
home rose 1.9 percent.) The index for household furnishings and
operations, which declined slightly in June, advanced 0.5 percent in July,
reflecting a 2.5 percent increase in the index for window and floor
coverings and other linens.
The transportation component, which advanced 1.8 percent in June,
declined 0.3 percent in July. The index for gasoline fell 2.0 percent,
following an 8.8 percent increase in June. Despite the July decline,
gasoline prices have advanced 18.3 percent since December after advancing
30.1 percent in all of 1999. The index for new vehicles, which declined
0.1 percent in June, rose 0.2 percent in July. (Prior to seasonal
adjustment, new vehicle prices fell 0.3 percent In July.) The index for
used cars and trucks turned down in July, declining 0.3 percent. Public
transportation costs increased 0.5 percent, largely as a result of a 0.7
percent rise in airline fares. Airline fares have risen 9.7 percent thus
far in 2000.
The index for apparel declined for the fourth consecutive month, down
1.0 percent in July. (Prior to seasonal adjustment, apparel prices fell
3.0 percent, reflecting seasonal price discounting on spring-summer wear.)
Medical care costs rose 0.3 percent in July to a level 4.1 percent
higher than a year ago. In July, the index for medical care commodities--
prescription drugs and nonprescription drugs and medical supplies--rose
0.2 percent. The index for medical care services rose 0.4 percent.
Charges for professional services and for hospital and related services
increased 0.2 and 0.6 percent, respectively.
The index for recreation costs increased 0.3 percent in July, the
same as in each of the preceding two months. The index for admissions to
movies, theaters, concerts, and sporting events rose 1.1 percent in July,
accounting for more than half of the overall increase in the July
recreation index.
The index for education and communication rose 0.6 percent in July,
following a 0.1 percent decrease in June. Educational costs rose 0.5
percent in July. The index for communication recorded its first increase
since January, advancing 0.8 percent. An increase in the index for
telephone services, reflecting a 1.4 percent rise in local charges, more
than offset a 2.2 percent decrease in prices for personal computers and
peripheral equipment.
The index for other goods and services increased 1.0 percent in July,
following declines in each of the preceding two months. Cigarette prices,
which fell 1.4 percent in June, rose 3.2 percent in July and have risen
8.8 percent thus far in 2000.
CPI for Urban Wage Earners and Clerical Workers (CPI-W)
On a seasonally adjusted basis, the CPI for Urban Wage Earners and
Clerical Workers increased 0.2 percent in July.
Table B. Percent changes in CPI for Urban Wage Earners and Clerical
Workers (CPI-W)
Seasonally adjusted Un-
Compound adjusted
Expenditure Changes from preceding month annual rate 12-mos.
Category 2000 3-mos. ended ended
Jan. Feb. Mar. Apr. May June July July '00 July '00
All Items .2 .5 .7 .0 .1 .6 .2 3.4 3.7
Food and beverages -.1 .4 .2 .1 .5 .1 .5 4.6 2.8
Housing .2 .6 .2 .2 .2 .5 .5 5.0 3.4
Apparel -1.0 .1 .2 -.5 -.2 -.5 -1.2 -7.3 -2.2
Transportation .2 1.3 2.6 -.8 -.5 2.0 -.5 4.5 7.4
Medical care .3 .4 .5 .4 .3 .4 .3 4.3 4.1
Recreation .2 -.1 .4 .0 .4 .3 .1 3.2 1.1
Education and
communication .6 -.5 -.1 .0 .2 -.3 .6 2.0 1.4
Other goods and
services .7 .9 .6 1.8 -1.0 -.3 1.2 -.3 6.1
Special Indexes
Energy 1.0 4.5 5.5 -2.4 -1.9 6.2 -.5 15.9 20.0
Food -.1 .4 .2 .1 .5 .1 .5 4.4 2.8
All Items less
food and energy .1 .2 .3 .2 .2 .1 .2 2.1 2.3
Consumer Price Index data for August are scheduled for release on
Friday, September 15, 2000, at 8:30 A.M. (EDT).
__________________________________________________________________________
Extending the use of hedonic models to
adjust prices for changes in quality
The Bureau of Labor Statistics (BLS) is continuing to expand the use in
the Consumer Price Index (CPI) of quality adjustments derived from hedonic
models. As first announced at the time of the April 2000 CPI release,
hedonic quality adjustments for Refrigerator/freezers, Microwave ovens, and
College textbooks are being incorporated into the index effective with the
July 2000 CPI. Refrigerator/freezers and Microwave ovens are part of the
Major appliances stratum; The item College textbooks is part of the
Educational books and supplies stratum. Papers describing these
adjustments will be available on the CPI's web site
(http://stats.bls.gov/cpihome.htm).
Effective with the CPI for October 2000, BLS will extend hedonic quality
adjustment to Washing machines and Clothes dryers. These items are both
part of the Major appliances stratum.
A hedonic model decomposes the price of a consumer product into implicit
prices for each of its important features and components, thereby providing
an estimate of the value of each feature and component. BLS plans to extend
this method to additional items in the CPI. As BLS does so, it will give
CPI users notice at least three months before the first use of hedonic
quality adjustment for each additional item and will have detailed papers
on the models to be employed available by the time of first use.
The relative importance (share of weight), as of December 1999, of the
Major appliances stratum was 0.205 percent in the CPI for all Urban
Consumers (CPI-U) and 0.236 percent in the CPI for Urban Wage Earners and
Clerical Workers (CPI-W). Within Major appliances, Washing machines are
estimated to represent 18 percent of the weight and Clothes dryers about 13
percent. Refrigerator/freezers are estimated to represent 33 percent of the
weight and Microwave ovens about 11 percent. BLS does not employ hedonic
quality adjustment for the remaining items in this stratum. Those items
include home freezers and conventional stoves and ovens.
The hedonic models that BLS analysts developed for Washing machines and
Clothes dryers use observations collected for the CPI, supplemented with
additional observations that the BLS collected specifically for this
purpose. Papers describing this work are in preparation and will be
available before release of the October 2000 CPI.
Additional work on hedonic quality adjustment is underway at BLS.
For more information on these changes, write to
Bureau of Labor Statistics
Division of Consumer Prices and Price Indexes
2 Massachusetts Ave. NE, Room 3260
Washington, DC 20212
or contact Paul Liegey either by telephone at (202) 691-5394 or by
electronic mail at Liegey_P@bls.gov.
__________________________________________________________________________
Facilities for Sensory Impaired
Information from this release will be made available to
sensory impaired individuals upon request. Voice phone:
202-691-5200, Federal Relay Services: 1-800-877-8339. For
a recorded message of Summary CPI data, call (202) 691-5200.
__________________________________________________________________________
Brief Explanation of the CPI
The Consumer Price Index (CPI) is a measure of the
average change in prices over time in a market basket of
goods and services. The Bureau of Labor Statistics
publishes CPIs for two population groups: (1) a CPI for All
Urban Consumers (CPI-U) which covers approximately 87
percent of the total population and (2) a CPI for Urban Wage
Earners and Clerical Workers (CPI-W) which covers 32 percent
of the total population. The CPI-U includes, in addition to
wage earners and clerical workers, groups such as
professional, managerial, and technical workers, the self-
employed, short-term workers, the unemployed, and retirees
and others not in the labor force.
The CPI is based on prices of food, clothing, shelter,
and fuels, transportation fares, charges for doctors' and
dentists' services, drugs, and other goods and services that
people buy for day-to-day living. Prices are collected in
87 urban areas across the country from about 50,000 housing
units and approximately 23,000 retail establishments-
department stores, supermarkets, hospitals, filling
stations, and other types of stores and service
establishments. All taxes directly associated with the
purchase and use of items are included in the index. Prices
of fuels and a few other items are obtained every month in
all 87 locations. Prices of most other commodities and
services are collected every month in the three largest
geographic areas and every other month in other areas.
Prices of most goods and services are obtained by personal
visits or telephone calls of the Bureau's trained
representatives.
In calculating the index, price changes for the various
items in each location are averaged together with weights
which represent their importance in the spending of the
appropriate population group. Local data are then combined
to obtain a U.S. city average. Separate indexes are also
published by size of city, by region of the country, for
cross-classifications of regions and population-size
classes, and for 26 local areas. Area indexes do not
measure differences in the level of prices among cities,
they only measure the average change in prices for each area
since the base period.
The index measures price change from a designed
reference date-1982-84 which equals 100.0. An increase of
16.5 percent, for example, is shown as 116.5. This change
can also be expressed in dollars as follows: the price of a
base period market basket of goods and services in the CPI
has risen from $10 in 1982-84 to $11.65.
For further details visit the CPI home page on the
Internet at http://stats.bls.gov/cpihome.htm or contact our
CPI Information and Analysis Section on (202) 691-7000.
__________________________________________________________________________
Calculating Index Changes
Movements of the indexes from one month to another are
usually expressed as percent changes rather than changes in index
points, because index point changes are affected by the level of
the index in relation to its base period while percent changes are
not. The example below illustrates the computation of index point
and percent changes.
Percent changes for 3-month and 6-month periods are expressed
as annual rates and are computed according to the standard formula
for compound growth rates. These data indicate what the percent
change would be if the current rate were maintained for a 12-month
period.
Index Point Change
CPI 115.7
Less previous index 111.2
Equals index point change 4.5
Percent Change
Index point difference 4.5
Divided by the previous index 111.2
Equals 0.040
Results multiplied by one hundred 0.040x100
Equals percent change 4.0
_________________________________________________________________________
A Note on Seasonally Adjusted and Unadjusted Data
Because price data are used for different purposes by
different groups, the Bureau of Labor Statistics publishes
seasonally adjusted as well as unadjusted changes each
month.
For analyzing general price trends in the economy,
seasonally adjusted changes are usually preferred since they
eliminate the effect of changes that normally occur at the
same time and in about the same magnitude every year--such
as price movements resulting from changing climatic
conditions, production cycles, model changeovers, holidays,
and sales.
The unadjusted data are of primary interest to
consumers concerned about the prices they actually pay.
Unadjusted data also are used extensively for escalation
purposes. Many collective bargaining contract agreements
and pension plans, for example, tie compensation changes to
the Consumer Price Index unadjusted for seasonal variation.
Seasonal factors used in computing the seasonally
adjusted indexes are derived by the X-12-ARIMA Seasonal
Adjustment Method. The updated seasonal data at the end of
1977 replaced data from 1967 through 1977. Subsequent
annual updates have replaced 5 years of seasonal data, e.g.,
data from 1995 through 1999 were replaced at the end of
1999. The seasonal movement of all items and 54 other
aggregations is derived by combining the seasonal movement
of 73 selected components. Each year the seasonal status of
every series is reevaluated based upon certain statistical
criteria. If any of the 73 components change their seasonal
adjustment status from seasonally adjusted to not seasonally
adjusted, not seasonally adjusted data will be used for the
last 5 years, but the seasonally adjusted indexes will be
used before that period.
Seasonally adjusted data, including the All items index
levels, are subject to revision for up to five years after
their original release. For this reason, BLS advises
against the use of these data in escalation agreements.
Effective with the calculation of the seasonal factors
for 1990, the Bureau of Labor Statistics has used an
enhanced seasonal adjustment procedure called Intervention
Analysis Seasonal Adjustment for some CPI series.
Intervention Analysis Seasonal Adjustment allows for better
estimates of seasonally adjusted data. Extreme values
and/or sharp movements which might distort the seasonal
pattern are estimated and removed from the data prior to
calculation of seasonal factors. Beginning with the
calculation of seasonal factors for 1996, X-12-ARIMA
software was used for Intervention Analysis Seasonal
Adjustment.
For the fuel oil and the motor fuels indexes, this
procedure was used to offset the effects that extreme price
volatility would otherwise have had on the estimates of
seasonally adjusted data for those series. For the
breakfast cereal index, the procedure was used to offset the
effects of price-cutting among cereal manufacturers. For
the educational books and supplies index, the procedure was
used to account for greater than normal sale prices on
educational reference books. For some alcoholic beverage
series, Intervention Analysis Seasonal Adjustment was used
to offset the effects of increased brewer's costs along with
increased demand for specialty beers. For the nonalcoholic
beverages index, the procedure was used to offset the
effects of a large increase in coffee prices due to adverse
weather. For the fats and oils series, the procedure was
used to account for lower domestic butter stocks, lower cold
storage supplies, and anticipation of a bumper soybean crop.
For the new trucks index, the procedure was applied to
account for loyalty rebates offered to customers by American
automakers. For the water and sewerage maintenance index,
the procedure was used to account for a data collection anomaly.
A description of Intervention Analysis Seasonal
Adjustment, as well as a list of unusual events modeled and
seasonal factors for these items may be obtained by writing
the Bureau of Labor Statistics, Division of Consumer Prices
and Price Indexes, Washington, DC 20212 or by calling Claire
McAnaw Gallagher on (202) 691-6968 or sending e-mail to
Gallagher_C@BLS.GOV.
Bureau of Labor Statistics
gibson_s@bls.gov
Last modified: Wednesday, August 16, 2000
URL: /news.release/cpi.nr0.htm
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Consumer Price Index