June 1999 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) was unchanged in June, before seasonal adjustment, remaining at a level of 166.2 (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 2.0 percent.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) was unchanged in June, prior to seasonal adjustment. The June level of 162.8 was 1.9 percent higher than the index in June 1998.

CPI for All Urban Consumers (CPI-U)

In June, on a seasonally adjusted basis, the CPI-U was unchanged for the second consecutive month. Energy costs, which fell 1.3 percent in May, declined 1.2 percent in June. The index for petroleum-based energy declined 2.7 percent, while the index for energy services rose 0.1 percent in June. The food index was unchanged in June. The index for food at home, which increased 0.6 percent in May, was unchanged in June, reflecting a downturn in the index for fruits and vegetables. Excluding food and energy, the CPI-U increased 0.1 percent in June, the same as in May.

Consumer prices rose at a seasonally adjusted annual rate (SAAR) of 2.9 percent in the second quarter after advancing at a 1.5 percent rate in the first three months of 1999. This brings the year-to-date annual rate to 2.2 percent and compares with an increase of 1.6 percent for all of 1998. The acceleration in 1999 reflects an upturn in petroleum-based energy prices. The energy index, which declined 8.8 percent in 1998, has risen at a 9.9 percent SAAR thus far in 1999. In the first half of 1999, petroleum-based energy costs increased at a 24.3 percent SAAR, while charges for energy services decreased at a 0.2 percent annual rate. The food index rose at a 1.7 percent SAAR in the second quarter, the same rate as in the first three months of 1999, following an increase of 2.3 percent in all of 1998. Grocery store food prices rose at a 1.5 percent SAAR in the first six months, with the largest increase among the six major grocery store food groups in the index for fruits and vegetables--up at a 4.7 percent rate. The CPI-U excluding food and energy advanced at a 2.3 percent rate in the second quarter of 1999, following an increase at a 0.9 percent rate in the first three months of 1999. The advance at a 1.6 percent SAAR for the first half of 1999 compares with a 2.4 percent increase for all of 1998. Smaller increases in the indexes for shelter and for tobacco and smoking products, a downturn in the index for new and used vehicles, and a larger drop in the index for apparel were responsible for the deceleration in the first half of 1999. The rates for selected groups for the last five and one-half years are shown below.

The food and beverages index was unchanged in June. The index for food at home also was unchanged, following a 0.6 percent increase in May. The index for fruits and vegetables, which increased 2.6 percent in May, declined 0.5 percent in June. The index for fresh fruits decreased 0.1 percent, despite a 9.6 percent rise in citrus fruits. Over the past 12 months, prices for citrus fruits have risen 36.7 percent. The index for fresh vegetables declined 1.2 percent. Prices for processed fruits and vegetables decreased 0.4 percent. The index for dairy products declined 0.1 percent, reflecting a drop in cheese prices. The index for meats, poultry, fish, and eggs rose 0.3 percent in June. Meat prices were unchanged as a 1.5 percent increase in the index for beef was offset by declines in the indexes for pork and for other meats--down 1.0 and 1.7 percent, respectively. Poultry prices rose 0.7 percent, while the index for fish and seafood declined 0.4 percent. Among the other major grocery store food groups, the index for nonalcoholic beverages rose 0.3 percent, reflecting an increase in prices for carbonated drinks, and the indexes for cereal and bakery products and for other food at home each rose 0.1 percent. The other two components of the food and beverages index--food away from home and alcoholic beverages--were unchanged and rose 0.2 percent, respectively.

The housing component rose 0.2 percent in June. For the second consecutive month, shelter costs increased 0.2 percent. Within shelter, the indexes for rent and for owners' equivalent rent each rose 0.1 percent, and the cost of lodging away from home increased 0.6 percent. (Prior to seasonal adjustment, the cost of lodging while away from home rose 1.8 percent in June.) The index for fuels and utilities increased 0.2 percent in June. The index for household fuels rose 0.1 percent, as increases in the indexes for natural gas and for fuel oil--up 1.6 and 0.9 percent, respectively--more than offset a 0.6 percent decrease in the index for electricity. (Prior to seasonal adjustment, charges for electricity rose 5.3 percent, reflecting the shift to seasonal rates in some areas.) The index for household furnishings and operations, which decreased 0.3 percent in May, rose 0.2 percent in June.

The transportation component decreased for the second consecutive month--down 0.6 percent in June--again reflecting declines in the indexes for gasoline and for airline fares. After increasing a record 15.0 percent in April, the gasoline index fell 2.7 and 3.2 percent in May and June, respectively. (Prior to seasonal adjustment, gasoline prices decreased 2.2 percent in June.) Airline fares, which had increased 12.5 percent in the 5 months ended in April, declined for the second consecutive month--down 4.8 percent in June. The index for new and used vehicles rose 0.1 percent in June; the index for new vehicles fell 0.1 percent, while the index for used cars and trucks increased 0.9 percent.

The index for apparel declined 0.4 percent in June, following a 0.2 percent drop in May. (Prior to seasonal adjustment, apparel prices fell 2.5 percent, reflecting seasonal price discounting on spring-summer wear.)

Medical care costs rose 0.4 percent in June to a level 3.4 percent above a year ago. The index for medical care commodities--prescription drugs, nonprescription drugs, and medical supplies--increased 0.4 percent, with the index for prescription drugs up 0.5 percent. The index for medical care services rose 0.4 percent. Charges for professional services and for hospital and related services each increased 0.4 percent.

The index for recreation costs was unchanged in June. Declines in the indexes for club membership dues and fees for participant sports, for recreational books, for sporting goods, and for video and audio equipment were largely offset by a 2.3 percent increase in the index for admissions to movies, theaters, concerts, and sporting events.

The index for education and communication was unchanged in June. Educational costs rose 0.3 percent, while the index for communication declined 0.2 percent. Within the latter group, the index for personal computers and peripheral equipment declined 2.2 percent, while the index for telephone services increased 0.1 percent. A 0.5 percent increase in local telephone service charges more than offset decreases in both long distance telephone charges and the cost of cellular telephone services-- down 0.1 and 2.1 percent, respectively.

The index for other goods and services increased 0.2 percent, following a 0.2 percent decrease in May. The index for tobacco and smoking products, which declined 1.4 percent in May, rose 0.2 percent in June. (Prior to seasonal adjustment, tobacco prices declined 0.7 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 was unchanged in June.

Compound Un- Expenditure Changes from preceding month annual rate adjusted 3-mos. 12-mos. Category 1998 1999 ended ended Dec. Jan. Feb. Mar. Apr. May June June `99 June `99 All Items .2 .2 .0 .1 .7 .0 .0 3.0 1.9 Food and beverages .1 .4 .1 -.2 .1 .3 .1 1.7 2.1 Housing .2 .0 .1 .3 .3 .1 .1 2.0 2.0 Apparel -.5 -1.1 -.4 -.4 1.4 -.1 -.5 3.5 -1.1 Transportation -.5 -.1 -.4 .6 2.6 -.4 -.5 6.8 1.1 Medical care .2 .3 .2 .3 .4 .2 .4 3.9 3.3 Recreation .1 .4 -.2 -.1 .2 .2 .1 2.0 .6 Education and communication -.2 .3 .2 .0 -.1 .0 .1 .0 .4 Other goods and services 5.8 2.5 -.2 -1.0 1.4 -.4 .3 5.3 10.6 Special Indexes Energy -1.3 -.1 -.2 2.0 6.4 -1.4 -1.2 15.2 1.1 Food .0 .5 .1 -.2 .1 .3 .1 1.7 2.1 All Items less food and energy .4 .1 .0 .0 .4 .1 .1 2.3 2.1

Consumer Price Index data for July are scheduled for release on Tuesday, August 17, 1999, at 8:30 A.M. (EDT).

CPI (Old Series)

For the first six months of 1999, BLS has published the Old Series CPI-U and Old Series CPI-W based on the former method of calculating the elementary aggregates, that is, employing an arithmetic mean in all index categories. These old series data are contained in tables 1 (LAS)-4 (LAS). From May to June, the Old Series CPI-U and the Old Series CPI-W each were up 0.1 percent; these series are not seasonally adjusted. (The unadjusted CPI-U and CPI-W using the new method of calculating the elementary aggregates each were unchanged in June.)

Consumer Price Index Formula Changed

On April 16, 1998, the Bureau of Labor Statistics announced its decision to use a new formula for calculating the basic components of the Consumer Price Index for all Urban Consumers (CPI-U) and the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This change is effective with data for January 1999.

The new formula, the geometric mean estimator, will be used in index categories that comprise approximately 61 percent of total consumer spending represented by the CPI-U. The remaining index categories, which are shown in the table below, will continue to be calculated as they have been. Based upon BLS research, it is expected that planned use of the new formula will reduce the annual rate of increase in the CPI by approximately 0.2 percentage point per year.

The geometric mean estimator has been introduced in both the CPI-U and the CPI-W effective with data for January 1999, in accord with the past practice of introducing methodological changes at the beginning of a calendar year. BLS will continue to publish "overlap" CPI-U and CPI-W series using the former calculation method for the first six months of 1999. These indexes will not be published regularly for months subsequent to June 1999, but will be available upon request.

Additional information on this change was published in the April 1998 CPI Detailed Report and is available on the Internet (http://stats.bls.gov/cpihome.htm). This information also may be obtained by writing to the Bureau of Labor Statistics, Division of Consumer Prices and Price Indexes, 2 Massachusetts Ave., N.E., Room 3615, Washington, D.C. 20212 or by calling (202) 606-7000.

Arithmetic Mean (Laspeyres) Formula

1. Selected shelter services:

A) Rent of primary B) Owners' equivalent C) Housing at school, residence rent of primary excluding board residence

2. Selected utilities and government charges:

A) Electricity C) Residential water and E) Telephone services, sewerage maintenance local charges

B) Utility natural gas D) State and local F) Cable television service registration, license, and motor vehicle property tax

3. Selected medical care services:

A) Physicians' services C) Eyeglasses and eye E) Hospital services care B) Dental services D) Services by other F) Nursing homes and medical professionals adult daycare

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 1994 through 1998 were replaced at the end of 1998. 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 some women's apparel indexes and the girls' apparel index, the procedure was used to offset the effects of changes in pricing methodology. For the tobacco and smoking products index, this procedure was used to offset the effects wholesale tobacco prices and legal fees passed on to consumers. For some alcoholic beverage series, Intervention Analysis Seasonal Adjustment was used to offset the effects of excise tax increases. For the Nonalcoholic beverages index, the procedure was used to offset the effects of a large increase in coffee prices due to adverse weather. The procedure was used to account for unusual butter fat supply reductions affecting the Fats and oils series. 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) 606-6968 or sending e-mail to Gallagher_C@BLS.GOV.