The Bureau of Labor Statistics (BLS) has announced that the Consumer Price Index for All Urban Consumers (CPI-U) was unchanged last month, on a seasonally adjusted basis. Before the adjustment the CPI-U declined 0.2 percent. Year-over-year, the CPI-U has fallen 2.1 percent, as a 28.1 percent decline in the energy index since its July 2008 peak has more than offset increased of 0.9 percent in the food index and 1.5 percent in the index for all items less food and energy. So, in real terms, if we remove the exaggerated movement in energy (basically oil prices), inflation is running less than 2 percent, which is the rate the Federal Reserve has set as its target for inflation. Before the seasonal adjustment, the index declined 0.2 percent, reflecting slight declines in food and energy prices.
For more information, please click on the Inflation Measures page on the menu bar above.
CONSUMER PRICE INDEX: JULY 2009
CPI for All Urban Consumers (CPI-U)
The Consumer Price Index for All Urban Consumers (CPI-U) decreased
0.2 percent in July before seasonal adjustment, the Bureau of Labor
Statistics of the U.S. Department of Labor reported today. Over the last
12 months the index has fallen 2.1 percent, as a 28.1 percent decline in
the energy index since its July 2008 peak has more than offset increases
of 0.9 percent in the food index and 1.5 percent in the index for all
items less food and energy.
On a seasonally adjusted basis, the CPI-U was unchanged in July
following a 0.7 percent increase in June. Small declines in the food and
energy indexes offset a small increase in the index for all items less
food and energy. The food index declined 0.3 percent in July with all six
major grocery store food groups posting declines. The energy index, which
rose 7.4 percent in June, fell 0.4 percent in July. Decreases in the
indexes for gasoline, fuel oil, and electricity more than offset an
increase in the index for natural gas.
The index for all items less food and energy rose 0.1 percent in July
following a 0.2 percent increase in June. The indexes for new vehicles,
tobacco, medical care and apparel all continued to increase in July, and
the index for airline fares turned up after a long series of declines. In
contrast to these increases, the shelter index decreased in July as the
index for lodging away from home fell and the indexes for rent and owners'
equivalent rent were unchanged.
Table A. Percent changes in CPI for All Urban Consumers (CPI-U)
Seasonally adjusted
Expenditure Compound
Category Changes from preceding month annual Un-
rate adjusted
3-mos. 12-mos.
Jan. Feb. Mar. Apr. May June July ended ended
2009 2009 2009 2009 2009 2009 2009 July 2009 July 2009
All items.......... .3 .4 -.1 .0 .1 .7 .0 3.4 -2.1
Food and beverages .1 -.1 -.1 -.2 -.2 .1 -.2 -1.4 1.1
Housing........... .0 .0 -.1 -.1 -.1 .0 -.2 -1.0 -.7
Apparel........... .3 1.3 -.2 -.2 -.2 .7 .6 4.5 1.1
Transportation.... 1.3 1.9 -1.1 -.4 .8 4.2 .2 22.7 -14.1
Medical care...... .4 .3 .2 .4 .3 .2 .2 2.8 3.2
Recreation........ .0 .4 .0 -.4 .0 .5 .0 2.1 1.2
Education and
communication.. .3 .2 .2 .3 .3 .2 .3 3.1 2.8
Other goods and
services....... .3 .2 2.7 2.6 -.2 .3 .8 3.3 7.5
Special indexes:
Energy............ 1.7 3.3 -3.0 -2.4 .2 7.4 -.4 32.5 -28.1
Food.............. .1 -.1 -.1 -.2 -.2 .0 -.3 -1.8 .9
All items less
food and energy .2 .2 .2 .3 .1 .2 .1 1.7 1.5
The food and beverages index, which rose 0.1 percent in June, fell
0.2 percent in July. The decrease was caused by the food at home index,
which declined for the seventh time in the last eight months, falling 0.5
percent. All six major grocery store food group indexes fell, with the
largest decreases being a 1.3 percent decline in the index for meats,
poultry, fish and eggs and a 0.6 percent decline in the dairy and related
products index, which has now fallen for eight months in a row. The
cereals and bakery products index posted the smallest decrease of the six
groups, falling 0.1 percent. The indexes for fruits and vegetables, for
nonalcoholic beverages, and for other food at home all declined 0.3
percent in July. The food at home index has declined 2.6 percent from its
peak in November 2008. In contrast to the decline in the food at home
index, the food away from home index rose 0.1 percent in July and the
index for alcoholic beverages increased 0.3 percent.
The housing index fell 0.2 percent in July after being unchanged in
June. The index for shelter fell 0.2 percent and the household energy
index declined 0.3 percent. Within the shelter group, the indexes for
rent and owners' equivalent rent were both unchanged in July after rising
0.1 percent in June. The index for lodging away from home turned down in
July, falling 2.1 percent after increasing 0.3 percent in June, and has
fallen 8.9 percent over the past 12 months. Within household energy, a
0.9 percent increase in the index for natural gas was more than offset by
declines in the other indexes, including a 0.6 percent decrease in the
electricity index and a 1.5 percent fall in the fuel oil index. The index
for household furnishings and operations, unchanged for each of the
previous three months, declined 0.1 percent in July. For the past 12
months, the housing index has declined 0.7 percent, with the shelter index
up 0.9 percent and the household energy index down 14.1 percent.
After rising 4.2 percent in June, the transportation index increased
0.2 percent in July. Most of the moderation was due to the motor fuel
index, which fell 0.4 percent in July after rising 17.2 percent in June.
The new vehicle index increased 0.5 percent in July after rising 0.7
percent in June, and the index for used cars and trucks was unchanged in
July after rising 0.9 percent in June. The public transportation index,
however, turned up in July, rising 1.9 percent after declining 0.5 percent
in June. The turnaround was mostly due to the index for airline fares,
which rose 2.1 percent in July after declining in each of the previous ten
months. Over the past 12 months, the transportation index has fallen 14.1
percent, with several of its components declining. The gasoline index
fell 37.3 percent while the index for airline fares declined 16.6 percent
and the index for used cars and trucks decreased 7.9 percent. However,
the new vehicle index has risen 1.2 percent over the past 12 months.
Among other CPI groups, the medical care index rose 0.2 percent in
July, the same increase as in June. Within that group, the index for
hospital and related services rose 0.7 percent while the index for
prescription drugs was unchanged. Over the last 12 months, the medical
care index has risen 3.2 percent. The index for other goods and services
rose 0.8 percent in July after advancing 0.3 percent in June. The larger
increase was driven by the tobacco index, which rose 2.2 percent as excise
tax increases in several states went into effect in July. The tobacco
index has now risen 27.8 percent over the past year. The apparel index
advanced 0.6 percent in July after a 0.7 percent increase in June. The
index for education and communication rose 0.3 percent in July after
rising 0.2 percent in June, while the index for recreation was unchanged
in July after rising 0.5 percent in June.
CPI for Urban Wage Earners and Clerical Workers (CPI-W)
The Consumer Price Index for Urban Wage Earners and Clerical
Workers (CPI-W) declined 0.2 percent in July, prior to seasonal
adjustment. The index value of 210.526 was 2.7 percent lower than in July
2008. On a seasonally adjusted basis, the CPI-W was unchanged in July.
Table B. Percent changes in CPI for Urban Wage Earners and
Clerical Workers (CPI-W)
Seasonally adjusted
Expenditure Compound
Category Changes from preceding month annual Un-
rate adjusted
3-mos. 12-mos.
Jan. Feb. Mar. Apr. May June July ended ended
2009 2009 2009 2009 2009 2009 2009 July 2009 July 2009
All items.......... .3 .4 -.1 .0 .1 .9 .0 4.4 -2.7
Food and beverages .0 -.2 -.1 -.2 -.2 .0 -.2 -1.6 1.0
Housing........... .0 .1 -.1 -.1 .0 -.1 -.1 -.8 -.5
Apparel........... .6 1.0 -.3 -.3 .0 .7 .6 5.5 1.3
Transportation.... 1.5 2.0 -1.3 -.5 .9 4.8 .1 25.8 -15.9
Medical care...... .4 .4 .2 .4 .3 .2 .2 3.0 3.4
Recreation........ .0 .4 .0 -.3 .0 .4 .0 1.6 1.1
Education and
communication.. .2 .2 .2 .2 .2 .1 .3 2.8 2.4
Other goods and
services....... .4 .2 3.9 3.8 -.2 .3 1.0 4.3 10.7
Special indexes:
Energy............ 1.9 3.6 -3.1 -2.4 .4 8.1 -.4 36.8 -28.5
Food.............. .0 -.2 -.1 -.2 -.3 .0 -.3 -1.9 .8
All items less
food and energy .2 .2 .2 .3 .2 .2 .1 2.1 1.8
Chained Consumer Price Index for All Urban Consumers (C-CPI-U)
The Chained Consumer Price Index for All Urban Consumers (C-CPI-U)
decreased 0.2 percent in July on a not seasonally adjusted basis. The
index has decreased 1.9 percent over the past year. Please note that the
indexes for the post-2007 period are subject to revision.
Upcoming release
Consumer Price Index data for August are scheduled for release
on Wednesday, September 16, 2009, at 8:30 A.M. (EDT).
__________________________________________________________________________________
Upcoming Changes to the Consumer Price Index news release
Beginning with the next edition of the Consumer Price Index news release
scheduled for publication on September 16, 2009, the Bureau of Labor
Statistics will introduce changes in the presentation of the text section of
the release. There will be no changes to the data or to the format and content
of the tables. A sample of the revamped Consumer Price Index news release will
be posted on the BLS Web site on Friday, August 14. For further information,
please see http://www.bls.gov/bls/changes_to_text_sections_of_nrs.htm.
__________________________________________________________________________________
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.
Brief Explanation of the CPI
The Consumer Price Index (CPI) is a measure of the average change in
prices over time of goods and services purchased by households. The
Bureau of Labor Statistics publishes CPIs for two population groups: (1)
the CPI for Urban Wage Earners and Clerical Workers (CPI-W), which covers
households of wage earners and clerical workers that comprise
approximately 32 percent of the total population and (2) the CPI for All
Urban Consumers (CPI-U) and the Chained CPI for All Urban Consumers (C-CPI-
U), which cover approximately 87 percent of the total population and
include in addition to wage earners and clerical worker households, 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 CPIs are 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. For the CPI-U and
CPI-W 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 27 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. For the C-CPI-U data are
issued only at the national level. It is important to note that the CPI-U
and CPI-W are considered final when released, but the C-CPI-U is issued in
preliminary form and subject to two annual revisions.
The index measures price change from a designed reference date. For
the CPI-U and the CPI-W the reference base is 1982-84 equals 100.0. The
reference base for the C-CPI-U is December 1999 equals 100.
An increase of 16.5 percent from the reference base, 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://www.bls.gov/cpi/ or contact our CPI Information and Analysis
Section on (202) 691-7000.
Note on Sampling Error in the Consumer Price Index
The CPI is a statistical estimate that is subject to sampling error
because it is based upon a sample of retail prices and not the complete
universe of all prices. BLS calculates and publishes estimates of the 1-
month, 2-month, 6-month and 12-month percent change standard errors
annually, for the CPI-U. These standard error estimates can be used to
construct confidence intervals for hypothesis testing. For example, the
estimated standard error of the 1 month percent change is 0.04 percent for
the U.S. All Items Consumer Price Index. This means that if we repeatedly
sample from the universe of all retail prices using the same methodology,
and estimate a percentage change for each sample, then 95% of these
estimates would be within 0.08 percent of the 1 month percentage change
based on all retail prices. For example, for a 1-month change of 0.2
percent in the All Items CPI for All Urban Consumers, we are 95 percent
confident that the actual percent change based on all retail prices would
fall between 0.12 and 0.28 percent. For the latest data, including
information on how to use the estimates of standard error, see "Variance
Estimates for Price Changes in the Consumer Price Index, January-December
2008". These data are available on the CPI home page
(http://www.bls.gov/cpi), or by using the following link
http://www.bls.gov/cpi/cpivar2008.pdf
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
202.416
Less previous index
201.800
Equals index point change
.616
Percent Change
Index point difference
.616
Divided by the previous index
201.800
Equals
0.003
Results multiplied by one hundred
0.003x100
Equals percent change
0.3
Regions Defined
The states in the four regions shown in Tables 3 and 6 are listed below.
The Northeast--Connecticut, Maine, Massachusetts, New Hampshire, New York,
New Jersey, Pennsylvania, Rhode Island, and Vermont.
The Midwest--Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota,
Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin.
The South--Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky,
Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina,
Tennessee, Texas, Virginia, West Virginia, and the District of Columbia.
The West--Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana,
Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.
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 before adjustment for seasonal variation.
Seasonal factors used in computing the seasonally adjusted indexes
are derived by the X-12-ARIMA Seasonal Adjustment Method. Seasonally
adjusted indexes and seasonal factors are computed annually. Each year,
the last 5 years of seasonally adjusted data are revised. Data from
January 2004 through December 2008 were replaced in January 2009.
Exceptions to the usual revision schedule were: the updated seasonal data
at the end of 1977 replaced data from 1967 through 1977; and, in January
2002, dependently seasonally adjusted series were revised for January 1987-
December 2001 as a result of a change in the aggregation weights for
dependently adjusted series. For further information, please see
"Aggregation of Dependently Adjusted Seasonally Adjusted Series," in the
October 2001 issue of the CPI Detailed Report.
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 in the aggregation of
the dependent series for the last 5 years, but the seasonally adjusted
indexes will be used before that period. Note: 47 of the 73 components
are seasonally adjusted for 2009.
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 seasonal factors introduced in January 2009, BLS adjusted 29
series using Intervention Analysis Seasonal Adjustment, including selected
food and beverage items, motor fuels, electricity and vehicles. For
example, this procedure was used for the Motor fuel series to offset the
effects of events such as damage to oil refineries from Hurricane Katrina.
For a complete list of Intervention Analysis Seasonal Adjustment
series and explanations, please refer to the article "Intervention
Analysis Seasonal Adjustment", located on our website at
http://www.bls.gov/cpi/cpisapage.htm.
For additional information on seasonal adjustment in the CPI, please
write to the Bureau of Labor Statistics, Division of Consumer Prices and
Price Indexes, Washington, DC 20212 or contact Jeff Wilson at (202) 691-
6968, or by e-mail at Wilson.Jeff@bls.gov. If you have general questions
about the CPI, please call our information staff at (202) 691-7000.
Last Modified Date: August 14, 2009
Gregg D. Killoren
victoria1014
