April 2000 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 in April, before seasonal adjustment, to a level of 171.2 (1982-84=100), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. For the 12-month period ended in April, the CPI-U increased 3.0 percent.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) also rose 0.1 percent in April, prior to seasonal adjustment. The April level of 167.9 was 3.2 percent higher than the index in April 1999.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U was unchanged in April, following an increase of 0.7 percent in March. The energy index, which rose 4.9 percent in March, declined 1.9 percent in April, registering its first decrease since last June. The index for petroleum-based energy fell 4.1 percent, while the index for energy services rose 0.5 percent. The food index rose 0.1 percent in April, the same as in March. Excluding food and energy, the CPI-U rose 0.2 percent in April, following an increase of 0.4 percent in March. Shelter costs, which increased 0.5 percent in March, rose 0.2 percent in April, accounting for more than half of the April deceleration in the index for all items less food and energy. Also contributing to the smaller rise in April was the deceleration in the indexes for airline fares, for apparel, and for household furnishings and operations.

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 four months of 2000, the CPI-U rose at a 4.3 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 four months of 2000, increasing at a 28.2 percent SAAR. Food costs, which rose 1.9 percent in all of 1999, have increased at a 1.5 percent SAAR thus far in 2000. Excluding food and energy, the CPI-U has advanced at a 2.9 percent rate thus far in 2000, compared with a 1.9 percent rise for all of 1999. Acceleration in the indexes for shelter, for household furnishing and operations, 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 0.1 percent in April. The index for food at home was unchanged, following a 0.1 percent rise in March. Declines in the indexes for fruits and vegetables, for nonalcoholic beverages, and for other food at home--down 0.4, 0.7, and 0.9 percent, respectively--offset increases in the indexes for meats, poultry, fish, and eggs, for dairy products, and for cereal and bakery products. Within the fruits and vegetables group, the index for fresh fruits dropped 3.0 percent, while the index for fresh vegetables rose 2.7 percent. Prices for processed fruits and vegetables declined 0.7 percent. The index for meats, poultry, fish, and eggs increased 0.6 percent in April. The indexes for beef and pork rose 1.0 and 0.9 percent, respectively, in April and have advanced 6.6 and 8.3 percent in the last 12 months. Poultry prices decreased 0.1 percent in April. Among the other major grocery store food groups, the index for dairy products increased 0.9 percent, following a 1.1 percent drop in March. The index for cereal and bakery products increased 0.3 percent, the same as in March. The other two components of the food and beverages index--food away from home and alcoholic beverages--each increased 0.1 percent in April.

The index for housing increased 0.1 percent in April, following a 0.4 percent rise in March. Shelter costs, which rose 0.5 percent in March, increased 0.2 percent in April. Within shelter, the indexes for rent and for owners' equivalent rent advanced 0.1 and 0.2 percent, respectively, while the index for lodging away from home declined 0.1 percent. (Prior to seasonal adjustment, the index for lodging away from home fell 1.2 percent.) The index for fuels and utilities, which declined 0.4 percent in March, advanced 0.2 percent in April. The index for fuel oil declined for the second consecutive month, down 4.8 percent in April. Despite the recent declines, fuel oil prices are 50.1 percent higher than a year ago. The index for natural gas rose substantially for the fourth consecutive month--up 1.4 percent in April and 6.6 percent in the first four months of this year. Charges for electricity rose 0.2 percent in April, following a decline of 0.2 percent in the preceding month. The index for household furnishings and operations, which increased 0.5 percent in March, rose 0.1 percent in April.

The transportation component, which rose 2.5 percent in March, declined 0.7 percent in April, largely as a result of a sharp turnaround in gasoline prices. The index for gasoline, which increased 11.1 percent in March, declined 4.1 percent in April. Despite the April decrease, gasoline prices were 27.4 percent higher than in April 1999. The index for new vehicles increased 0.3 percent in April after advancing 0.1 percent in March. The index for used cars and trucks rose 0.7 percent, its first increase in six months. Public transportation costs declined 0.3 percent, largely as a result of a 0.5 percent decrease in airline fares.

The index for apparel declined 0.5 percent, following a 0.3 percent rise in March. (Prior to seasonal adjustment, apparel prices rose 0.6 percent.)

Medical care costs rose 0.3 percent in April and were 3.9 percent higher than a year ago. In April, the index for medical care commodities- -prescription drugs, nonprescription drugs, and medical supplies--rose 0.1 percent. The index for medical care services rose 0.4 percent in April. Charges for professional services and for hospital and related services increased 0.3 and 0.7 percent, respectively.

The index for recreation costs was unchanged in April. Increases in the indexes for admissions to movies, theaters, concerts, and sporting events, for pets and pet products, and for sporting goods were offset by declines in the indexes for video and audio and for toys.

For the second consecutive month, the index for education and communication was unchanged. Educational costs rose 0.4 percent in April, reflecting an increase in the index for child care and nursery school. The index for communication declined 0.5 percent, reflecting decreases in the indexes for telephone services and for personal computers and peripheral equipment--down 0.3 and 3.4 percent, respectively.

The index for other goods and services advanced 1.4 percent in April, largely as a result of a 4.7 percent rise in the index for cigarettes. Charges for legal services--up 1.0 percent--also contributed to the April advance in this major group.

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 April.

Consumer Price Index data for May are scheduled for release on Wednesday, June 14, 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 are being 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.

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.

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