August 1997 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) rose 0.2 percent before seasonal adjustment in August to a level of 160.8 (1982- 84=100), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. For the 12-month period ended in August, the CPI-U increased 2.2 percent.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) also rose 0.2 percent in August, prior to seasonal adjustment. The August 1997 CPI-W level of 157.8 was 2.1 percent higher than the index in August 1996.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U rose 0.2 percent in August, the same as in July. The food index increased 0.4 percent in August. Grocery store food prices, which rose 0.3 percent in July, increased 0.6 percent in August, reflecting a larger increase in prices for fresh fruits and vegetables. The energy index, which had exerted a moderating effect on the CPI-U throughout most of 1997, increased 1.7 percent in August. The index for petroleum-based energy rose 4.3 percent, while the index for energy services fell 0.8 percent. Excluding food and energy, the CPI-U rose 0.1 percent, following an increase of 0.2 percent in July. The smaller advance in August reflects declines in the indexes for apparel and upkeep and for airline fares.

For the first eight months of 1997, the CPI-U advanced at a 1.6 percent seasonally adjusted annual rate (SAAR). This compares with an increase of 3.3 percent in all of 1996. The energy and food components have been largely responsible for the moderation thus far in 1997. The energy index has declined at a 4.6 percent SAAR, while food prices have risen at a 1.8 percent annual rate. Excluding food and energy, the CPI-U has risen at a 2.2 percent SAAR in the first eight months of 1997, following a 2.6 percent increase in all of 1996.

The food and beverage index rose 0.4 percent in August. The index for grocery store food prices, which rose 0.3 percent in July, increased 0.6 percent in August. The index for fresh fruits and vegetables rose 4.0 percent in August, following an increase of 0.9 percent in July. The index for processed fruits and vegetables rose 0.3 percent in August. Advances in the indexes for dairy products and for cereal and bakery products also contributed to the larger increase in August. The 0.1 percent rise in the index for dairy products followed a 0.6 percent decrease in July and was the first advance in this component since October 1996. During this nine-month period, dairy product prices fell 4.0 percent. The index for cereal and bakery products, which rose 0.1 percent in July, increased 0.2 percent in August. Acceleration in these grocery store food groups was partially offset by the deceleration in the indexes for meats, poultry, fish, and eggs and for other food at home, both of which rose 0.1 percent in August. Within the former group, poultry prices fell 1.5 percent, and the indexes for beef and for pork were virtually unchanged. The moderation in the index for other food at home reflects a decline in prices for sugar and sweets and a notably smaller increase in coffee prices, which rose 0.6 percent in August following increases totaling 23.5 percent in the preceding five months. The other two components of the food and beverage index--restaurant meals and alcoholic beverages--increased 0.2 and 0.3 percent, respectively.

The housing component rose 0.1 percent in August after increasing 0.2 percent in July. Shelter costs rose 0.2 percent. Within shelter, renters' costs increased 0.2 percent; homeowners' costs, 0.3 percent; and maintenance and repair costs, 0.1 percent. The index for fuel and other utilities, which rose 0.2 percent in July, declined 0.5 percent in August. The index for household fuels declined 0.8 percent, reflecting price decreases for fuel oil, natural gas, and electricity. A 0.2 percent decline in the index for other utilities and public services was attributable to a decline in the index for telephone services; charges for interstate toll calls fell 5.0 percent in August. The index for household furnishings and operation, which declined 0.2 percent in July, fell 0.3 percent in August.

The transportation component, which rose 0.1 percent in July, increased 0.6 percent in August. A sharp upturn in gasoline prices more than offset declines in the costs of public transportation and of new vehicle purchase. The index for gasoline, which had declined in each of the preceding five months, rose 5.4 percent in August. New vehicle purchase costs declined in August; the index for new vehicle prices decreased 0.1 percent and automobile finance charges dropped 1.0 percent. (Prior to seasonal adjustment, new vehicle prices declined 0.5 percent.) The index for used cars declined 0.8 percent. Public transportation costs turned down in August. The index for airline fares, which rose 2.3 percent in July, declined 4.7 percent in August.

The index for apparel and upkeep declined 1.0 percent in August, reflecting the somewhat slower introduction of higher-priced fall-winter wear this August than in recent years. (Prior to seasonal adjustment, apparel commodity prices fell 0.2 percent, reflecting seasonal price declines for spring-summer wear.)

Medical care costs rose 0.2 percent in August to a level 2.6 percent above a year ago. The index for medical care commodities--prescription drugs, nonprescription drugs, and medical supplies--decreased 0.1 percent. The index for medical care services rose 0.3 percent. Charges for professional services and for hospital and related services increased 0.3 and 0.2 percent, respectively.

Entertainment costs, which increased 0.1 percent in July, rose 0.2 percent in August. Increases in the indexes for reading materials and for admissions to movies, theaters, concerts, and sporting events--up 0.9 and 1.3 percent, respectively--more than offset declines in the indexes for club memberships and for fees for participant sports.

The index for other goods and services rose 0.6 percent in August, following an increase of 0.3 percent in July. Advances of 0.7 percent each in the indexes for tuition and other school fees, for school books and supplies, and for tobacco and smoking products, coupled with a 1.6 percent rise in legal fees, accounted for the August rise.

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 0.2 percent in August.

After seasonal adjustment, the level of the CPI-U for All Items was 160.9 in August; the seasonally adjusted CPI-W for All Items was 157.8.

Beginning with January 1997 data, BLS is reporting the level of the seasonally adjusted U.S. City Average All Items CPI-U and CPI-W in this monthly news release. Effective with the release of January 1998 data in February 1998, the seasonally adjusted All Items indexes will be fully integrated into the releases, appearing in tables 2 and 5 and in the text where relevant. Like other seasonally adjusted CPI data, 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.

Consumer Price Index data for September are scheduled for release on Thursday, October 16, 1997, at 8:30 A.M. (EDT).

Effective with the release of data for January 1998, the Bureau of Labor Statistics (BLS) will introduce an improved quality adjustment technique in the new stratum of the Consumer Price Index (CPI) called Personal Computers and Peripheral Equipment.

Currently, personal computers are part of the Information Processing Equipment stratum. As previously announced, beginning with the CPI for January 1998, Information Processing Equipment will become an expenditure class entitled Information and Information Processing Other Than Telephone Services. Personal Computers and Peripheral Equipment will be one of four strata in that expenditure class.

Analysts in the Producer Price Index (PPI) program have developed and implemented a regression procedure, called a hedonic model, that decomposes the price of personal computers into implicit prices for each important feature and component of the computer. This model, which has been used in the PPI since 1991, provides a way to estimate the value of changes or improvements. The CPI has used similar hedonic methods to adjust apparel prices for many years.

Starting with the CPI for January 1998, when a personal computer or selected item of peripheral equipment, such as a modem, in the CPI sample improves in some way, a regression-based quality adjustment will be made. The value of the improvement, as derived from the PPI regression estimates, will be deducted from the observed price change for the product. (Conversely, if a model deteriorates, the value of the difference will be added to the price.)

Additional information on these changes will be published in the June 1997 CPI Detailed Report and is available on the Internet (at http://stats.bls.gov/cpihome.htm). This information can also be obtained by writing to Bureau of Labor Statistics, Division of Consumer Prices and Price Indexes, Room 3260, 2 Massachusetts Ave. NE, Washington, DC 20212 or by telephoning Joseph Chelena at (202) 606-6982 ext. 255.