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CPI At a Glance

CPI-U: 218.815
Monthly Change: Up 1%
Year-to-year Change: Up 5%
Core CPI-U: Up 0.3% [Seasonally adjusted]
CPI-W: 215.223
Monthly Change: Up 1.1%
Year-to-year Change: Up 5.6%
Chained CPI-U: 125.582
Monthly Change: Up 0.8%
Year-to-Year Change: Up 4.2%

Important notes: Numbers are not seasonally adjusted unless noted; base year=100 for CPI-U and CPI-W is 1982-1984; base year for C-CPI-U is 1999.

Technorati Tags: Consumer, Price, Index, CPI, inflation

CONSUMER PRICE INDEX: JUNE 2008

The Consumer Price Index for All Urban Consumers (CPI-U) increased
1.0 percent in June, before seasonal adjustment, the Bureau of Labor
Statistics of the U.S. Department of Labor reported today. The June level
of 218.815 (1982-84=100) was 5.0 percent higher than in June 2007.

The Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W) increased 1.1 percent in June, prior to seasonal adjustment. The
June level of 215.223 (1982-84=100) was 5.6 percent higher than in June
2007.

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U)
increased 0.8 percent in June on a not seasonally adjusted basis. The
June level of 125.582 (December 1999=100) was 4.2 percent higher than in
June 2007. Please note that the indexes for the post-2006 period are
subject to revision.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U advanced 1.1 percent in
June, following a 0.6 percent increase in May. The index for energy rose
sharply for the second straight month, increasing 6.6 percent in June
following a 4.4 percent increase in May. The increase in the energy index
accounted for around two-thirds of the overall increase in the all items
index in June. The index for petroleum-based energy advanced 10.0 percent
and the index for energy services rose 1.5 percent. The food index rose
0.8 percent in June after rising 0.3 percent in May. The index for food
at home went up 1.0 percent in June, with indexes for four of the six
major grocery store food groups sharply accelerating. The index for all
items less food and energy increased 0.3 percent in June, following a 0.1
percent rise in April and a 0.2 percent increase in May. Larger increases
in the indexes for shelter and for tobacco and smoking products and an
upturn in the apparel index contributed to the larger increase.

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.
Dec. Jan. Feb. Mar. Apr. May June ended ended
2007 2008 2008 2008 2008 2008 2008 June 2008 June 2008

All items………. .4 .4 .0 .3 .2 .6 1.1 7.9 5.0
Food and beverages .1 .7 .4 .2 .9 .3 .7 8.1 5.2
Housing……….. .3 .2 .2 .4 .3 .5 .5 5.2 3.5
Apparel……….. .1 .4 -.3 -1.3 .5 -.3 .1 1.0 -.2
Transportation…. 1.0 .5 -.7 .7 -.7 2.0 3.8 22.3 12.0
Medical care…… .3 .5 .1 .1 .2 .2 .2 2.1 4.0
Recreation…….. .0 .2 .1 .3 -.1 .1 .1 .6 1.3
Education and
communication.. .3 .4 .1 .3 .4 .4 .5 5.1 3.4
Other goods and
services……. .3 .4 .2 .4 .5 .4 .4 5.2 3.8
Special indexes:
Energy………… 1.7 .7 -.5 1.9 .0 4.4 6.6 53.6 24.7
Food………….. .1 .7 .4 .2 .9 .3 .8 8.5 5.3
All items less
food and energy .2 .3 .0 .2 .1 .2 .3 2.5 2.4

Consumer prices advanced at a seasonally adjusted annualized rate
(SAAR) of 7.9 percent in the second quarter after increasing at a 3.1
percent rate in the first three months of 2008. This brings the year-to-
date annual rate to 5.5 percent and compares with an increase of 4.1
percent in all of 2007. The index for energy increased at a 29.1 percent
SAAR in the first half of 2008, accounting for around half of the advance
in the all items CPI-U during that period. Energy commodities increased
at a 34.7 percent rate and energy services rose at a 20.1 percent rate.
The food index rose at a 6.8 percent SAAR in the first half of 2008,
accounting for about one-sixth of the overall CPI-U increase in the
period. The food at home index increased at an 8.7 percent annual rate in
the first half of 2008, compared to a 5.6 percent increase for all of
2007. Four of the six major groups accelerated over last year. The
increases ranged from annual rates of 15.5 percent for the index for
cereal and bakery products to 5.2 percent for the index for meats, poultry
fish and eggs.

The CPI-U excluding food and energy increased at a 2.5 percent SAAR
in the second quarter after rising at a 2.0 percent rate in the first
three months of 2008. The advance at a 2.3 percent SAAR over the first
six months of 2008 compares with an increase of 2.4 percent in all of
2007. Deceleration in the shelter and medical care indexes and a larger
rate of decline in the apparel index more than offset acceleration in the
indexes for recreation, education and communication, and other goods and
services. The shelter index increased at a 2.2 percent SAAR after
increasing 3.1 percent in 2007 while the apparel index declined at a 1.9
percent rate after falling 0.3 percent in 2007. The annual rates for
selected groups for the last seven-and-one-half years are shown below.

Percentage change 12 months SAAR 6
ended in December mos.
ended
June
2001 2002 2003 2004 2005 2006 2007 2008

All items……….. 1.6 2.4 1.9 3.3 3.4 2.5 4.1 5.5
Food and beverages 2.8 1.5 3.5 2.6 2.3 2.2 4.8 6.6
Housing………… 2.9 2.4 2.2 3.0 4.0 3.3 3.0 4.3
Apparel………… -3.2 -1.8 -2.1 -.2 -1.1 .9 -.3 -1.9
Transportation….. -3.8 3.8 .3 6.5 4.8 1.6 8.3 11.9
Medical care……. 4.7 5.0 3.7 4.2 4.3 3.6 5.2 2.7
Recreation……… 1.5 1.1 1.1 .7 1.1 1.0 .8 1.5
Education and
communication….. 3.2 2.2 1.6 1.5 2.4 2.3 3.0 4.1
Other goods and
services………. 4.5 3.3 1.5 2.5 3.1 3.0 3.3 4.8
Special indexes:
Energy…………. -13.0 10.7 6.9 16.6 17.1 2.9 17.4 29.1
Energy commodities -24.5 23.7 6.9 26.7 16.7 6.1 29.4 34.7
Energy services… -1.5 .4 6.9 6.8 17.6 -.6 3.4 20.1
All items less
energy………… 2.8 1.8 1.5 2.2 2.2 2.5 2.8 3.0
Food………….. 2.8 1.5 3.6 2.7 2.3 2.1 4.9 6.8
All items less food
and energy…….. 2.7 1.9 1.1 2.2 2.2 2.6 2.4 2.3

The food and beverages index rose 0.7 percent in June. The index for
food at home increased 1.0 percent, following a 0.3 percent rise in May.
Four of the six major grocery store food group indexes accelerated in
June. The index for fruits and vegetables, which was virtually unchanged
in May, rose 2.8 percent in June. The index for fresh vegetables rose 6.1
percent in June and the indexes for fresh fruit and for processed fruits
and vegetables increased 0.8 percent and 1.2 percent, respectively. The
index for dairy and related products increased 1.6 percent in June after a
0.1 percent decline in May. The index for meats, poultry fish and eggs
rose 0.8 percent in June after a 0.1 percent increase in May. The beef
and veal index increased sharply for the second month in a row, up 1.7
percent in June after a 1.5 percent increase in May. The pork index
turned up, increasing 0.6 percent in June after declining 0.8 percent the
previous month. The index for eggs increased 1.4 percent in June after a
3.8 percent decrease in May and is 23.2 percent higher than in June 2007.
The index for nonalcoholic beverages and beverage materials rose 0.2
percent in June after a 0.9 percent decline in May. The two decelerating
groups were cereals and bakery products, increasing 0.5 percent in June
after a 1.6 percent rise in May, and other food at home, up 0.4 percent in
June after a 0.5 percent increase in May. The indexes for food away from
home and for alcoholic beverages increased 0.5 and 0.1 percent,
respectively.

The index for housing rose 0.5 percent in June, the same increase as
the previous month. The index for shelter increased 0.3 percent,
following a 0.2 percent rise in May and a 0.1 percent increase in April.
Within shelter, the indexes for rent and owners’ equivalent rent increased
0.4 and 0.3 percent, respectively. The index for lodging away from home
increased 0.7 percent in June. The index for household energy registered
its fifth consecutive large increase, increasing 2.1 percent in June. The
index for fuel oil rose 10.4 percent for the second consecutive month and
is 78.0 percent higher than in June 2007. The index for electricity,
after increasing for three consecutive months, declined 0.1 percent in
June. The index for natural gas increased sharply for the fifth
consecutive month, rising 4.9 percent in June and is up 21.5 percent over
the last 12 months. The index for household furnishings and operations
was virtually unchanged in June after increasing 0.2 percent in May.

The transportation index advanced 3.8 percent in June, reflecting
large increases in the indexes for motor fuel and public transportation.
The index for gasoline rose 10.1 percent, accounting for slightly more
than half of the total advance in the all items index, and was 32.8
percent higher than in June 2007. (Prior to seasonal adjustment, gasoline
prices in June rose 7.9 percent above their previous peak level recorded
in May.) The index for new vehicles turned up in June, increasing 0.2
percent after a 0.1 percent decline in May; the new vehicles index is down
1.0 percent over the last 12 months. The index for used cars and trucks
declined 0.3 percent in June, the third consecutive decrease, but is up
0.7 percent over June 2007. The index for public transportation advanced
3.4 percent in June, reflecting a 4.5 percent increase in the index for
airline fares. (Prior to seasonal adjustment, airline fares rose 6.7
percent and were 18.7 percent higher than a year ago.)

The index for apparel rose 0.1 percent in June following a 0.3
percent decline in May. Prior to seasonal adjustment, apparel prices
declined 3.1 percent in June and are 0.2 percent lower than in June 2007.
Over the last year, women’s and girls’ apparel prices declined 3.3 percent
while prices for men’s and boys’ apparel rose 1.0 percent.

Medical care costs rose 0.2 percent in June, and are 4.0 percent
higher than a year ago. The index for medical care commodities–
prescription drugs, nonprescription drugs, and medical supplies-increased
0.1 percent in June after a 0.7 percent decline in May. The index for
medical care services increased 0.3 percent in June after a 0.5 percent
increase in May. This reflected a deceleration in the index for
professional services, which increased 0.3 percent in June after a 0.7
percent increase in May. The index for hospital and related services
increased 0.4 percent in June.

The index for recreation was increased 0.1 percent in June, the same
percent change as in May. Increases in the indexes for pets, pet products
and services and for sporting goods more than offset declines in the
indexes for video and audio, for toys, and for admissions.

The index for education and communication increased 0.5 percent in
June. Educational costs rose 0.4 percent and the index for communication
costs rose 0.6 percent. Within the latter category, the index for
delivery services increased 2.1 percent and long distance land-line
telephone charges increased 3.3 percent. These increases were partially
offset by a 0.5 percent decline in the index for information technology,
hardware and services.

The index for other goods and services increased 0.4 percent in June.
The index for tobacco and smoking products rose 1.5 percent, accounting
for over 80 percent of the increase in this group. The index for personal
care increased 0.1 percent.

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 1.2 percent in June.

Percentage change 12 months SAAR 6
ended in December mos.
ended
June
2001 2002 2003 2004 2005 2006 2007 2008

Consumer Price Index data for July are scheduled for release on
Thursday, August 14, 2008, at 8:30 A.M. (EDT).

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 0.06 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 0.12 percent of the 1 month percentage change
based on all retail prices. 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 0.08
and 0.32 percent. For the latest data, including information on how to use
the estimates of standard error, see “Variance Estimates for Changes in the
Consumer Price Index, January 2005- December 2005″ in the CPI Detailed
Report, February 2006. These data are available on the CPI home page
(http://www.bls.gov/cpi), using the following link
http://www.bls.gov/cpi/cpivar2006.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
0.003×100
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 2003
through December 2007 were replaced in January 2008. 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: 48 of the 73 components are seasonally
adjusted for 2008.

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 2008, BLS adjusted 20
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.

Consumer Price Index (CPI) - June 2008 [PDF]

Source: Department of Labor, Bureau of Labor Statistics

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