June 1996 Consumer Price Index

Historical release narrative reproduced from the official public-domain source. Statistical tables, standard technical appendices, administrative material and attendance rosters are omitted; formatting is adapted for reading. Figures retain the release's historical context and may have been revised. Consult the linked source for the complete document.

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent before seasonal adjustment in June to a level of 156.7 (1982- 84=100), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. For the 12-month period ended in June, the CPI-U increased 2.8 percent.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) also rose 0.1 percent in June, prior to seasonal adjustment. The June 1996 CPI-W level of 154.1 was 2.8 percent higher than the index in June 1995.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U rose 0.1 percent in June, its smallest advance since a similar increase last November. The energy index, which had risen 9.4 percent in the 6-month period ended in May after declining throughout most of 1995, fell 2.2 percent in June. The index for petroleum-based energy declined 3.7 percent in June and the index for energy services dropped 0.5 percent. The food index rose 0.7 percent in June, reflecting large price increases for meats and for dairy products, coupled with smaller than usual price declines for fresh fruits and vegetables. Excluding food and energy, the CPI-U rose 0.2 percent, the same as in May.

See page 5 for a note on the implementation of improvements in CPI sample rotation procedures and the announcement of a change in the hospital and related service component of the CPI.

Consumer prices rose at a seasonally adjusted annual rate (SAAR) of 3.1 percent in the second quarter after advancing at a 4.0 percent rate in the first 3 months of 1996. This brings the year-to-date annual rate to 3.5 percent, which compares with an increase of 2.5 percent for all of 1995. The food and energy components have accelerated thus far in 1996, after acting as moderating influences on overall consumer price movements throughout most of the past 5 years. Through the first 6 months of 1996, energy costs have risen at a 12.1 percent rate. The index for petroleum-based energy goods advanced at an annual rate of 23.4 percent and the index for energy services at a 2.2 percent SAAR. The food index has increased at a 3.9 percent annual rate in the first 6 months of 1996, following an advance of 2.1 percent in all of 1995. Grocery store foods have risen at a 4.7 percent rate in 1996, with a sharp upturn in the index for fruits and vegetables--up at a SAAR of 10.6 percent thus far in 1996 after declining 1.3 percent in all of 1995- -primarily responsible for the increase.

Excluding food and energy, the CPI-U rose at a 2.2 percent rate in the second quarter and has advanced at a 2.8 percent annual rate thus far in 1996. This compares with a 3.0 percent increase for all of 1995. Within this category, the index for commodities less food and energy has risen at a 1.1 percent annual rate thus far in 1996, following a 1.7 percent increase in all of 1995. A larger decline in clothing prices in 1996 (at a SAAR) than in 1995--down 1.1 percent relative to down 0.1 percent--was primarily responsible for the moderation. The index for services less energy has advanced at a 3.7 percent annual rate in 1996, virtually the same as the 3.6 percent rise in all of 1995. The rates for selected groups during the past 8-1/2 years are shown below.

Percent change 12 months SAAR ended in December 6- months ended in June 1988 1989 1990 1991 1992 1993 1994 1995 1996

The food and beverage index rose 0.7 percent in June. The index for grocery store foods, which was unchanged in May, increased 1.0 percent in June, reflecting sharp increases in the indexes for fruits and vegetables, for meats, and for dairy products. The indexes for fresh fruits and for fresh vegetables increased 4.6 percent and 1.0 percent, respectively. (Prior to seasonal adjustment, fresh fruit prices fell 0.2 percent, and fresh vegetable prices declined 1.1 percent.) The index for processed fruits and vegetables was unchanged. The index for meats, poultry, fish, and eggs increased 1.5 percent in June. Meat prices rose 1.8 percent. The index for beef increased 1.0 percent in June, following declines in each of the 6 preceding months. Pork prices rose 4.2 percent in June and are 12.6 percent above their level a year ago. Poultry prices registered their second consecutive large advance, increasing 1.1 percent in June. The index for dairy products increased 1.5 percent. The other two major grocery store food indexes--cereal and bakery products and other food at home--each rose 0.1 percent in June. The other two components of the food and beverage index--restaurant meals and alcoholic beverages--each increased 0.2 percent in June.

The housing component rose 0.1 percent in June after advancing 0.2 percent in May, reflecting a downturn in the index for fuel and other utilities. A decline in the index for household fuels--down 0.9 percent--more than offset a 0.4 percent rise in the index for other utilities and public services. Among household fuels, the index for electricity decreased 1.1 percent and the index for fuel oil fell 5.2 percent, more than offsetting a 0.7 percent rise in the index for natural gas. (Prior to seasonal adjustment, charges for electricity rose 4.3 percent, reflecting the switch to higher summer rates in some areas.) The index for other utilities and public services rose 0.4 percent in June, in part as a result of a 0.5 percent increase in the index for telephone services. Shelter costs advanced 0.2 percent in June, the same as in each of the 4 preceding months. Within shelter, renters' costs and homeowners' costs each rose 0.2 percent, while maintenance and repair costs were unchanged. The index for household furnishings and operation rose 0.1 percent in June, following a 0.2 percent drop in May.

The transportation index declined 0.4 percent in June after advancing 0.7 percent in May. The index for motor fuels, which increased 2.3 percent in May, declined 3.6 percent in June and accounted for the deceleration in the overall transportation component. In the period from November 1995 through May, the index for gasoline had risen 18.2 percent. Despite these increases, as of June, gasoline prices were still 7.4 percent below their peak level of December 1990. Automobile purchase costs registered their largest advance since the introduction of the 1996 models. The indexes for new car prices and for automobile finance charges increased 0.4 and 1.2 percent, respectively. (Prior to seasonal adjustment, new car prices rose 0.1 percent.) The index for used cars declined for the third consecutive month--down 1.1 percent. The index for public transportation increased 2.0 percent, largely reflecting an increase in airline fares.

The index for apparel and upkeep, which increased 0.1 percent in May, declined 0.4 percent in June. (Prior to seasonal adjustment, clothing prices fell 2.5 percent, reflecting somewhat larger than usual seasonal price declines.)

Medical care costs rose 0.3 percent in June to a level 3.6 percent above a year ago. The index for medical care commodities--prescription drugs, non-prescription drugs, and medical supplies--increased 0.4 percent in June. The index for medical care services rose 0.2 percent in June. Charges for professional services and for hospital and related services increased 0.1 and 0.7 percent, respectively.

Entertainment costs increased 0.3 percent in June. A 0.9 percent increase in the index for admissions to movies, theaters, concerts, and sporting events accounted for over half of the June advance in the entertainment group.

The index for other goods and services advanced 0.2 percent in June, following an increase of 0.4 percent in May. A decline in the index for personal services, coupled with a smaller increase in the index for tobacco and smoking products, was largely responsible for the moderation.

CPI for Urban Wage Earners and Clerical Workers (CPI-W)

On a seasonally adjusted basis, the CPI for Urban Wage Earners and Clerical Workers rose 0.1 percent in June.

Un- Seasonally adjusted Compound adjust Changes from preceding month annual ed rate 12- 1995 1996 3-mos. mos. Expenditure ended ended Category Dec Jan Feb Mar Apr May Jun June'96 June'96

Consumer Price Index data for July are scheduled for release on Tuesday, August 13, 1996, at 8:30 A.M. (EDT). Extending the Improvements in the CPI Sample Rotation Procedures

As announced on March 29, effective with the collection of the Consumer Price Index data for June 1996, the Bureau of Labor Statistics has extended to all item categories the improvement in sampling rotation procedures that was introduced in the January 1995 CPI for food-at-home categories.

The CPI replaces its sample of items and retail outlets on a five- year rotation to keep them from becoming out of date. Before January 1995, a correlation tended to exist between a new item's quantity weight and its initial price change. This occurred because the first price used in index calculations was also used to estimate the new item's base period weight. The problem was more significant for many categories of food items that exhibit short-term price fluctuations. Effective with the index for January 1995, in a process called "seasoning," base period item weights for food items were calculated that were much less likely to be correlated with price change after the new samples were linked into the index. Starting with the index for June 1996, this concept of decoupling an item's weight and initial price change is being extended to all other categories in the CPI. For more details, see "Extending the Improvements in CPI Sample Rotation Procedures" in the June 1996 issue of the CPI Detailed Report.

Changing the Hospital and Related Services Component of the Consumer Price Index

Effective with the release of data for January 1997, the Bureau of Labor Statistics (BLS) will introduce improvements in the way in which the Hospital and related services component of the Consumer Price Index (CPI) is calculated. Two complementary changes will be made:

Items within the hospital and related services component will be reclassified into two main groups, or item strata--Hospital services and Nursing home services, instead of the current three--Hospital rooms, Other inpatient services, and Hospital outpatient services.

The definition of the specific items selected for pricing within individual hospitals will be broadened substantially. These newly defined items will be reselected using new procedures in the majority of the hospitals from which price data currently are collected for the CPI.

Additional information on these changes will be published in the June 1996 CPI Detailed Report and is available on the Internet. (Go to gopher://stats.bls.gov and access /pub/special.requests/cpi/hospital.txt.) This information may also be obtained by writing to the Bureau of Labor Statistics, Division of Consumer Prices and Price Indexes, 2 Massachusetts Ave. NE, Room 3260, Washington, DC 20212, or by telephoning Elaine Cardenas at (202) 606-6985 ext. 251