Consumer Price Index Summary
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Patrick C. Jackman (202) 691-7000 USDL-00-175
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INTERNET ADDRESS: Wednesday, June 14, 2000
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CONSUMER PRICE INDEX: MAY 2000
The Consumer Price Index for All Urban Consumers (CPI-U) increased
0.1 percent in May, before seasonal adjustment, to a level of 171.3 (1982-
84=100), the Bureau of Labor Statistics of the U.S. Department of Labor
reported today. For the 12-month period ended in May, the CPI-U increased
3.1 percent.
The Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W) also rose 0.1 percent in May, prior to seasonal adjustment. The
May level of 168.1 was 3.3 percent higher than the index in May 1999.
CPI for All Urban Consumers (CPI-U)
On a seasonally adjusted basis, the CPI-U rose 0.1 percent in May
after registering no change in April. The energy index declined 1.9
percent in May, the same as in April. In May, the index for petroleum-
based energy fell 3.4 percent, and the index for energy services declined
0.1 percent. The food index, which rose 0.1 percent in April, advanced
0.5 percent in May, its largest monthly increase since a 0.6 percent rise
in October 1998. The index for food at home, which was unchanged in
April, increased 0.7 percent in May with each of the major food at home
groups except dairy products contributing to the acceleration. Excluding
food and energy, the CPI-U rose 0.2 percent in May, the same as in April.
Table A. Percent changes in CPI for Urban Consumers (CPI-U)
Seasonally adjusted Un-
Compound adjusted
Expenditure Changes from preceding month annual rate 12-mos.
Category 1999 2000 3-mos. ended ended
Nov. Dec. Jan. Feb. Mar. Apr. May May '00 May '00
All Items .2 .2 .2 .5 .7 .0 .1 3.1 3.1
Food and beverages .2 .1 .0 .4 .1 .1 .5 2.7 2.2
Housing .3 .1 .3 .5 .4 .1 .2 2.9 2.9
Apparel -.4 .0 -1.1 .2 .3 -.5 -.2 -1.5 -1.5
Transportation .1 .8 .1 1.3 2.5 -.7 -.5 5.4 6.2
Medical care .3 .4 .3 .4 .5 .3 .3 4.6 4.0
Recreation .2 .2 .2 .0 .4 .0 .3 2.8 .9
Education and
communication .3 .2 .5 -.5 .0 .0 .1 .4 1.4
Other goods and
services -.1 .0 .6 .8 .5 1.4 -.6 5.3 5.6
Special Indexes
Energy .1 1.8 1.0 4.6 4.9 -1.9 -1.9 3.8 14.6
Food .2 .1 -.1 .4 .1 .1 .5 2.9 2.2
All Items less
food and energy .2 .1 .2 .2 .4 .2 .2 3.2 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 five months of 2000, the CPI-U rose at a 3.6 percent
seasonally adjusted annual rate (SAAR). This compares with an increase of
2.7 percent for all of 1999. The index for energy, which turned up
sharply in 1999--advancing 13.4 percent--accelerated further in the first
five months of 2000, increasing at a 16.5 percent SAAR. Food costs, which
rose 1.9 percent in all of 1999, have increased at a 2.5 percent SAAR thus
far in 2000. Excluding food and energy, the CPI-U has advanced at a 2.7
percent rate thus far in 2000, compared with a 1.9 percent rise for all of
1999. Acceleration in the indexes for shelter, for airline fares, for
medical care, and for tobacco and smoking products have contributed to the
larger rate of advance thus far this year.
The food and beverages index advanced 0.5 percent in May. The index
for food at home, which was unchanged in April, rose 0.7 percent in May.
Each of the major food at home groups except dairy products contributed to
the acceleration in May. The index for fruits and vegetables, which fell
0.4 percent in April, rose 1.6 percent in May. Within the fruits and
vegetables group, increases in the indexes for fresh vegetables and for
processed fruits and vegetables--up 5.8 and 1.3 percent, respectively--
more than offset a 2.1 percent decline in the index for fresh fruits. The
index for meats, poultry, fish, and eggs advanced 0.8 percent in May after
increasing 0.6 percent in April. In May, the indexes for beef, pork, and
poultry rose 0.9, 0.4, and 0.7 percent, respectively. The index for
cereal and bakery products increased 0.7 percent, following a 0.3 percent
rise in April. The indexes for nonalcoholic beverages and other food at
home, each of which declined in April, turned up in May. On the other
hand, the index for dairy products declined 0.6 percent after increasing
0.9 percent in April. The other two components of the food and beverages
index--food away from home and alcoholic beverages--increased 0.1 percent
and were unchanged, respectively.
The index for housing increased 0.2 percent in May, following a 0.1
percent rise in April. Shelter costs, which rose 0.2 percent in April,
increased 0.3 percent in May. Within shelter, the index for rent
increased 0.3 percent; owners' equivalent rent rose 0.2 percent; and the
index for lodging away from home advanced 0.7 percent. (Prior to seasonal
adjustment, the index for lodging away from home fell 1.6 percent.) The
index for fuels and utilities, which rose 0.2 percent in April, declined
0.1 percent in May. The index for fuel oil declined for the third
consecutive month, down 1.0 percent in May. Despite the recent declines,
fuel oil prices are 47.2 percent higher than a year ago. The index for
natural gas rose for the fifth consecutive month--up 0.7 percent in May
and 7.4 percent in the first five months of this year. The index for
electricity declined 0.4 percent in May. (Prior to seasonal adjustment,
charges for electricity rose 0.7 percent.) The index for household
furnishings and operations rose 0.1 percent in May, the same as in April.
The transportation component declined for the second consecutive
month--down 0.5 percent in May--reflecting another drop in gasoline
prices. The index for gasoline declined 3.5 percent in May, following a
4.1 percent drop in April. Despite these recent declines, gasoline prices
in May were 26.6 percent higher than a year ago. The index for new
vehicles increased 0.2 percent in May after advancing 0.3 percent in
April. (Prior to seasonal adjustment, new vehicle prices fell 0.1
percent.) The index for used cars and trucks rose 0.9 percent. Public
transportation costs increased 0.6 percent, largely as a result of a 0.8
percent rise in airline fares.
The index for apparel declined 0.2 percent in May, following a 0.5
percent drop in April. (Prior to seasonal adjustment, apparel prices fell
0.8 percent, reflecting discounting of women's clothing.)
Medical care costs rose 0.3 percent in May and were 4.0 percent
higher than a year ago. In May, the index for medical care commodities--
prescription drugs, and nonprescription drugs and medical supplies--rose
0.3 percent. The index for medical care services also rose 0.3 percent in
May. Charges for professional services and for hospital and related
services increased 0.2 and 0.4 percent, respectively.
The index for recreation costs, which was unchanged in April,
increased 0.3 percent in May. The index for video and audio rose 1.2
percent in May, following a 0.5 percent decline in April.
The index for education and communication rose 0.1 percent, following
two consecutive months of no change. Educational costs rose 0.4 percent
in May, while the index for communication declined 0.1 percent. The
latter decrease reflects declines in the indexes for telephone services
and for personal computers and peripheral equipment--down 0.1 and 0.7
percent, respectively.
The index for other goods and services, which advanced 1.4 percent in
April, declined 0.6 percent in May. Cigarette prices fell 2.8 percent in
May, following a 4.7 percent rise in April.
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 0.1 percent in May.
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 1999 2000 3-mos. ended ended
Nov. Dec. Jan. Feb. Mar. Apr. May May '00 May '00
All Items .2 .2 .2 .5 .7 .0 .1 3.2 3.3
Food and beverages .2 .1 -.1 .4 .2 .1 .5 2.9 2.4
Housing .3 .1 .2 .6 .2 .2 .2 2.7 2.8
Apparel -.3 .1 -1.0 .1 .2 -.5 -.2 -1.8 -1.6
Transportation .1 .9 .2 1.3 2.6 -.8 -.5 5.2 6.6
Medical care .3 .3 .3 .4 .5 .4 .3 4.8 3.9
Recreation .0 .2 .2 -.1 .4 .0 .4 3.2 .8
Education and
communication .3 .2 .6 -.5 -.1 .0 .2 .4 1.4
Other goods and
services -.2 .0 .7 .9 .6 1.8 -1.0 5.6 6.4
Special Indexes
Energy .2 2.1 1.0 4.5 5.5 -2.4 -1.9 4.1 15.5
Food .2 .1 -.1 .4 .2 .1 .5 3.2 2.3
All Items less
food and energy .2 .1 .1 .2 .3 .2 .2 3.0 2.3
Consumer Price Index data for June are scheduled for release on
Tuesday, July 18, 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 January 2000 CPI
release, hedonic quality adjustments for Video Cassette Recorders and
Digital Versatile Disc players were incorporated into the index
effective with the April 2000 CPI. These items are in the Other video
equipment item stratum, which contains video equipment other than
televisions. Papers describing these adjustments are on the CPI's web site
(http://stats.bls.gov/cpihome.htm). Effective with the CPI for July 2000,
BLS will extend hedonic quality adjustment to Refrigerator/freezers and
Microwave ovens, which are part of the Major appliances stratum, and to
College textbooks, which are part of the Educational books and supplies
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. We plan
to extend this method to additional items in the CPI. As we do so, we
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, Refrigerator/freezers
are estimated to represent 33 percent of the weight and Microwave ovens
about 11 percent. The remaining items in this stratum-those that will not
be subject to hedonic quality adjustment at this time-include home
freezers, washers and dryers, and conventional stoves and ovens. The
December 1999 relative importance of the Educational books and supplies
stratum was 0.196 percent in the CPI-U and 0.192 percent in the CPI-W.
Within Educational books and supplies, College textbooks are estimated to
represent 79 percent of the weight. The items in this stratum that will
not be subject to hedonic quality adjustment at this time include
Elementary and high school books and supplies and Encyclopedias and other
reference books.
The hedonic models that BLS analysts developed for
Refrigerator/freezers and Microwave ovens use observations collected for
the CPI, supplemented with additional observations that the BLS collected
specifically for this purpose. The College textbook work was accomplished
using only observations collected for the CPI, without supplemental
collected data. Papers describing this work are in preparation and will be
available before release of the July 2000 CPI.
Additional work on hedonic quality adjustment for telephones and for
washers and dryers 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
mailto:gibson_s@bls.gov
Last modified:
Wednesday, June 14, 2000
URL: /news.release/cpi.nr0.htm
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Consumer Price Index