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INTERNET ADDRESS: http://www.bls.gov/cpi/ Thursday, August 14,2008
CONSUMER PRICE INDEX: JULY 2008
The Consumer Price Index for All Urban Consumers (CPI-U) increased
0.5 percent in July, before seasonal adjustment, the Bureau of Labor
Statistics of the U.S. Department of Labor reported today. The July level
of 219.964 (1982-84=100) was 5.6 percent higher than in July 2007.
The Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W) increased 0.5 percent in July, prior to seasonal adjustment. The
July level of 216.304 (1982-84=100) was 6.2 percent higher than in July
2007.
The Chained Consumer Price Index for All Urban Consumers (C-CPI-U)
increased 0.4 percent in July on a not seasonally adjusted basis. The
July level of 126.116 (December 1999=100) was 4.8 percent higher than in
July 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 0.8 percent in
July, following a 1.1 percent increase in June. The index for energy rose
sharply for the third straight month, increasing 4.0 percent in July and
accounting for about half of the overall increase in the all items index.
The food index rose 0.9 percent in July after rising 0.8 percent in June.
The index for food at home rose 1.2 percent in July after rising 1.0
percent in June. Indexes for five of the six major grocery store food
groups rose at least 1.0 percent. The index for all items less food and
energy increased 0.3 percent in July, the second straight such increase.
The indexes for apparel and for recreation increased more sharply than in
June, but the indexes for shelter and medical care rose more slowly.
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
2008 2008 2008 2008 2008 2008 2008 July 2008 July 2008
All items.......... .4 .0 .3 .2 .6 1.1 .8 10.6 5.6
Food and beverages .7 .4 .2 .9 .3 .7 .9 8.0 5.8
Housing........... .2 .2 .4 .3 .5 .5 .6 6.5 3.9
Apparel........... .4 -.3 -1.3 .5 -.3 .1 1.2 4.2 .8
Transportation.... .5 -.7 .7 -.7 2.0 3.8 1.7 34.3 13.4
Medical care...... .5 .1 .1 .2 .2 .2 .1 1.8 3.5
Recreation........ .2 .1 .3 -.1 .1 .1 .4 2.4 1.7
Education and
communication.. .4 .1 .3 .4 .4 .5 .5 5.5 3.7
Other goods and
services....... .4 .2 .4 .5 .4 .4 .4 4.6 4.0
Special indexes:
Energy............ .7 -.5 1.9 .0 4.4 6.6 4.0 79.4 29.3
Food.............. .7 .4 .2 .9 .3 .8 .9 8.4 6.0
All items less
food and energy .3 .0 .2 .1 .2 .3 .3 3.5 2.5
During the first seven months of 2008, the CPI-U rose at a 6.2
percent seasonally adjusted annualized rate (SAAR). This compares with a
4.1 percent increase for the 12 months ending December 2007. The energy
index rose at a 33.1 percent SAAR in the first seven months of 2008 after
increasing 17.4 percent in 2007. Gasoline prices increased at a 35.2
percent SAAR in 2008 after a 29.6 percent increase in 2007, while natural
gas prices rose at a 71.3 percent SAAR after decreasing 0.4 percent in
2007. The food index has increased at a 7.6 SAAR for the first seven
months of 2008 after increasing 4.9 percent in 2007. Excluding food and
energy, the CPI-U has advanced at a 2.5 percent SAAR following a 2.4
percent increase in 2007.
The food and beverages index rose 0.9 percent in July. The index for
food at home increased 1.2 percent, following a 1.0 percent rise in June.
Five of the six major grocery store food group indexes increased at least
1.0 percent in July. The index for cereal and bakery products increased
1.8 percent in July and is 12.1 percent higher than in July 2007, while
the fruits and vegetables index rose 1.2 percent in July and is 10.1
percent higher than a year ago. Within the fruits and vegetables group,
the fresh fruits index was virtually unchanged in July, while the index
for fresh vegetables rose 2.9 percent. The index for meats, poultry,
fish, and eggs rose 1.0 percent in July after a 0.8 percent increase in
June. The index for dairy and related products increased 1.6 percent in
July, with the index for milk increasing 4.3 percent. The index for other
food at home rose 1.0 percent in July after a 0.4 percent increase in
June. The index for nonalcoholic beverages and beverage materials
increased 0.7 percent in July. The other two components of the food and
beverages index-food away from home and alcoholic beverages-increased 0.6
and 0.4 percent respectively.
The index for housing rose 0.6 percent in July after increasing 0.5
percent the previous month. The index for shelter increased 0.2 percent
after a 0.3 percent increase in June. Within shelter, the indexes for
rent and owners' equivalent rent increased 0.3 and 0.1 percent,
respectively, while the index for lodging away from home increased 0.7
percent for the second straight month. The index for household energy
rose 3.8 percent in July to a level 18.2 percent higher than in July 2007.
The index for natural gas increased 7.4 percent in July. It was the sixth
straight large increase and the index is up 32.7 percent since July 2007.
The index for electricity increased 2.5 percent in July after declining
0.1 percent in June. The index for household furnishings and operations
increased 0.4 percent in July after being virtually unchanged in June.
The transportation index advanced 1.7 percent in July, the third
straight substantial increase. The index for gasoline increased 4.1
percent and accounted for over 80 percent of the increase in this group.
(Prior to seasonal adjustment, gasoline prices increased 0.7 percent over
their previous peak in June and are 37.9 percent higher than in July
2007.) The index for new vehicles increased 0.2 percent in July while
the index for used cars and trucks declined 0.1 percent. During the last
12 months, new vehicle prices have declined 0.8 percent and prices for
used cars and trucks have fallen 0.1 percent. The index for public
transportation increased 1.1 percent in July, mostly due to a 1.3 percent
increase in the index for airline fares. (Prior to seasonal adjustment,
airline fares increased 2.1 percent in July and are 19.9 percent higher
than in July 2007.)
The index for apparel rose 1.2 percent in July following a 0.1
percent increase in June. (Prior to seasonal adjustment, apparel prices
declined 2.3 percent in July.) Apparel prices have increased 0.8 percent
since July 2007.
Medical care prices rose 0.1 percent in July after rising 0.2 percent
in June and are 3.5 percent higher than a year ago. The index for medical
care commodities--prescription drugs, nonprescription drugs, and medical
supplies-decreased 0.2 percent in July after a 0.1 percent increase in
June. The index for medical care services increased 0.2 percent in July.
The indexes for professional services and for hospital and related
services increased 0.2 percent and 0.3 percent, respectively.
The index for recreation increased 0.4 percent in July, following a
0.1 percent increase in June. Increases in the indexes for pets and pet
products and services, for sporting goods, and for admissions, more than
offset declines in the indexes for photography and for toys. The index
for video and audio was virtually unchanged in July.
The index for education and communication increased 0.5 percent in
July, with both the education and communication components increasing 0.5
percent. Within the latter category, the indexes for information and
information processing increased 0.6 percent, reflecting a 0.7 percent
increase in the index for telephone services. The index for information
technology, hardware and services rose 0.2 percent in July after declining
for four months in a row.
The index for other goods and services increased 0.4 percent in July,
the third consecutive such increase. The index for tobacco and smoking
products rose 1.2 percent and 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 0.9 percent 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
2008 2008 2008 2008 2008 2008 2008 July 2008 July 2008
All items.......... .4 .0 .4 .2 .7 1.2 .9 11.9 6.2
Food and beverages .7 .3 .2 .9 .3 .8 .9 8.2 5.8
Housing........... .2 .2 .5 .4 .5 .5 .7 6.9 4.3
Apparel........... .8 -.3 -1.2 .2 -.2 .0 .8 2.7 .7
Transportation.... .7 -.7 .7 -.7 2.1 4.0 1.8 36.7 14.4
Medical care...... .6 .1 .1 .2 .1 .2 .1 1.7 3.6
Recreation........ .2 .1 .3 -.2 .0 .2 .4 2.4 1.7
Education and
communication.. .3 .1 .2 .4 .3 .5 .5 5.6 3.3
Other goods and
services....... .5 .3 .4 .4 .5 .6 .5 6.4 4.6
Special indexes:
Energy............ .8 -.7 1.9 -.2 4.5 6.8 4.0 81.3 29.7
Food.............. .7 .3 .2 1.0 .3 .8 .9 8.6 6.0
All items less
food and energy .3 .0 .1 .1 .2 .3 .3 3.2 2.5
Consumer Price Index data for August are scheduled for release on
Tuesday, September 16, 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
0.003x100
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 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.
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.
.
Bureau of Labor Statistics
