August 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) rose 0.2 percent in August, before seasonal adjustment, to a level of 167.1 (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 2.3 percent.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) rose 0.3 in August, prior to seasonal adjustment. The August level of 163.8 was 2.4 percent higher than the index in August 1998.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U increased 0.3 percent in August, the same as in July. Energy costs increased sharply for the second consecutive month--up 2.7 percent in August--accounting for about two-thirds of the August advance in the overall CPI. The index for petroleum-based energy rose 5.4 percent in August, and the index for energy services increased 0.3 percent. For the second consecutive month in August, the food index increased 0.2 percent and the index for food at home, 0.1 percent. Excluding food and energy, the CPI-U rose 0.1 percent, following an increase of 0.2 percent in July. Downturns in the indexes for airline fares and cigarettes accounted for the smaller advance in the August all items less food and energy index.

During the first eight months of 1999, the CPI-U rose at a 2.6 percent seasonally adjusted annual rate (SAAR). This compares with an increase of 1.6 percent for all of 1998. The acceleration thus far in1999 has been due to energy costs, which increased at a 15.4 percent annual rate in the first eight months of 1999 after declining 8.8 percent in all of 1998. Food costs, which rose 2.3 percent in 1998, have risen at a 1.9 percent SAAR in the first eight months of 1999. Excluding food and energy, the CPI-U has advanced at a 1.6 percent rate compared with a 2.4 percent rise for all of 1998.

The food and beverages index rose 0.2 percent in August. The index for food at home increased 0.1 percent, the same as in July. The index for fruits and vegetables, which had declined in each of the preceding two months, rose 0.6 percent in August. (Prior to seasonal adjustment, the index for fruits and vegetables was virtually unchanged.) The index for fresh fruits decreased 0.4 percent, despite another increase in citrus fruit prices. In the first eight months of 1999, prices for citrus fruits have risen 60.8 percent. The index for fresh vegetables rose 2.2 percent and the index for processed fruits and vegetables increased 0.1 percent. The index for dairy products rose 0.5 percent in August. The index for meats, poultry, fish, and eggs, which declined 0.1 percent in July, increased 0.3 percent in August. Increases in the indexes for eggs and poultry--up 4.0 and 0.8 percent, respectively--more than offset declines in the indexes for beef and veal and for pork. Among the other major grocery store food groups, the index for other food at home rose 0.3 percent, while the indexes for cereal and bakery products and for nonalcoholic beverages declined 0.9 and 0.1 percent, respectively. The other two components of the food and beverages index--food away from home and alcoholic beverages--each increased 0.3 percent.

The index for housing rose 0.2 percent in August, following an increase of 0.1 percent in July. Shelter costs also rose 0.2 percent in August. Within shelter, the indexes for rent and for owners' equivalent rent each increased 0.2 percent, while the index for lodging away from home declined 0.3 percent. The index for fuels and utilities increased 0.4 percent in August. The index for household fuels rose 0.4 percent. The indexes for fuel oil and for natural gas increased 2.9 and 1.9 percent, respectively, while the index for electricity declined 0.3 percent. The index for household furnishings and operations, which was unchanged in July, rose 0.1 percent in August.

The transportation component, which rose 1.2 percent in July, advanced 0.9 percent in August. The gasoline index increased sharply for the second consecutive month--up 5.6 percent in August after rising 4.3 percent in July. Gasoline prices have risen 25.1 percent thus far in 1999, but as of August are 9.8 percent lower than their peak level in November 1990. Airline fares, which increased 6.5 percent in July, turned down in August, declining 2.7 percent. The index for new and used vehicles rose 0.1 percent in August; a 1.0 percent increase in the index for used cars and trucks more than offset a 0.1 percent decline in the index for new vehicles.

The index for apparel declined for the fourth consecutive month, down 0.3 percent in August. Discounting on men's and boys' wear more than offset price increases on women's and girls' clothing.

Medical care costs rose 0.4 percent in August to a level 3.4 percent above a year ago. The index for medical care commodities--prescription drugs, nonprescription drugs, and medical supplies--increased 0.6 percent, with the index for prescription drugs up 0.7 percent. The index for medical care services rose 0.3 percent. Charges for physicians' services and for hospital services increased 0.1 and 0.6 percent, respectively.

In August, for the third consecutive month, the index for recreation costs was unchanged. Increases in the indexes for cable television, for fees for lessons, and for club memberships were offset by declines in the indexes for toys, for pets and pet services, for sporting goods, for photography, and for admissions to movies, theaters, concerts, and sporting events.

The index for education and communication increased 0.2 percent in August. Educational costs rose 0.3 percent, and the index for communication increased 0.1 percent. Within the latter group, the index for personal computers and peripheral equipment declined 3.8 percent, while the index for telephone services increased 0.3 percent.

The index for other goods and services declined 0.2 percent in August, following a 0.9 percent increase in July. The index for tobacco and smoking products, which rose 3.3 percent in July, fell 1.3 percent in August, reflecting a 1.8 percent drop in cigarette prices.

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.

Consumer Price Index data for September are scheduled for release on Tuesday, October 19, 1999, at 8:30 A.M. (EDT).

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.