July 2001 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) declined 0.3 percent in July, before seasonal adjustment, to a level of 177.5 (1982- 84=100), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. For the 12-month period ended in July, the CPI-U increased 2.7 percent.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) declined 0.5 percent in July, prior to seasonal adjustment. The July level of 173.8 was 2.6 percent higher than the index in July 2000.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U fell 0.3 percent in July, its first monthly decline since April 2000. The energy index--down 5.6 percent in July--recorded its largest drop since April 1986. The index for petroleum-based energy declined 10.3 percent and the index for energy services fell 1.0 percent. The food index, which increased 0.4 percent in June, rose 0.3 percent in July. Excluding food and energy, the CPI-U rose 0.2 percent, following a 0.3 percent increase in June. Downturns in the indexes for lodging away from home and for airline fares more than offset a sharp increase in the index for tobacco and smoking products.

See page 3 for a technical note on the data released today. See page 4 for a note on planned changes in the CPI in 2002.

During the first seven months of 2001, the CPI-U rose at a 2.8 percent seasonally adjusted annual rate (SAAR). This compares with an increase of 3.4 percent for all of 2000. The index for energy, which registered double-digit increases in both 1999 and 2000, declined at a 0.7 percent SAAR during the first seven months of 2001. Food costs, which rose 2.8 percent in all of 2000, have increased at a 3.8 percent SAAR thus far in 2001. Excluding food and energy, the CPI-U has advanced at a 2.9 percent SAAR thus far in 2001, compared with a 2.6 percent rise for all of 2000. Acceleration in the indexes for shelter, 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 increased 0.3 percent in July. The index for food at home, which rose 0.5 percent in June, increased 0.3 percent in July. Deceleration in the index for fruits and vegetables was largely responsible for the moderation in grocery store food prices. The index for fruits and vegetables was unchanged in July after increasing 1.4 percent in June. A 0.8 percent decline in the index for fresh fruits was offset by increases in the indexes for fresh vegetables and for processed fruits and vegetables--up 0.3 and 0.7 percent, respectively. The recent increase in dairy support prices continued to impact the index for dairy products, which rose 0.8 percent in July, following increases of 0.8 and 1.3 percent in the preceding two months. The index for other food at home- -up 0.6 percent in July--also reflected this impact with sharp increases in the prices for butter and for margarine. The index for meats, poultry, fish, and eggs rose 0.3 percent in July. Beef prices, which had increased 8.8 percent over the 12-month period ended in June, turned down in July, declining 0.2 percent. The indexes for poultry and pork rose 1.3 and 0.4 percent, respectively. The other two major food at home groups--cereal and bakery products and nonalcoholic beverages-- rose 0.4 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 housing index was unchanged in July, following increases of 0.4 percent in each of the preceding two months. Each of the three major housing groups--shelter, fuels and utilities, and household furnishings and operations--contributed to the deceleration. Shelter costs, which rose 0.5 percent in June, increased 0.1 percent in July. Within shelter, the indexes for rent and owners' equivalent rent rose 0.4 and 0.3 percent respectively, while the index for lodging away from home declined 1.8 percent. (Prior to seasonal adjustment, the index for lodging away from home rose 0.2 percent.) The index for fuels and utilities fell 0.9 percent, following a 0.4 percent rise in June. Declines in the indexes for fuel oil and for natural gas--down 2.8 and 4.1 percent, respectively-- more than offset a 0.6 percent increase in the index for electricity. The index for household furnishings and operations, which rose 0.3 percent in June, was unchanged in July.

The transportation component declined for the second consecutive month, falling 2.3 percent in July, largely as a result of a sharp decline in gasoline prices. The index for gasoline fell 11.0 percent in July, its sharpest drop since an 11.2 percent decline in April 1986. The index for new vehicles was unchanged in July. (Prior to seasonal adjustment, prices for new vehicles fell 0.4 percent.) The index for used cars and trucks declined for the fourth consecutive month--down 0.4 percent in July. The index for public transportation, which rose 3.8 percent in June, declined 1.1 percent in July. Airline fares, which rose 5.0 percent in June, declined 0.2 percent in July.

The index for apparel declined for the fourth consecutive month--down 0.6 percent in July. (Prior to seasonal adjustment, apparel prices fell 2.9 percent, reflecting seasonal price discounting on spring-summer wear.)

Medical care costs rose 0.1 percent in July to a level 4.5 percent higher than a year ago. In July, the index for medical care commodities-- prescription drugs, nonprescription drugs, and medical supplies--increased 0.2 percent. The index for medical care services rose 0.1 percent in July. Charges for professional services and for hospital and related services each increased 0.2 percent.

The index for recreation, which declined in both May and June, rose 0.2 percent in July. An upturn in the index for cable television and a 0.7 percent rise in the index for newspapers and magazines were largely responsible for the July increase.

The index for education and communication increased 0.5 percent in July, the same as in June. Educational costs rose 0.4 percent and the index for communication advanced 0.5 percent. Within the later group, the indexes for postage and for telephone services increased 1.2 and 0.6 percent, respectively, while the index for personal computers and peripheral equipment declined 1.7 percent.

The index for other goods and services, which rose 0.4 percent in June, increased 1.6 percent in July. A 4.8 percent increase in the index for tobacco and smoking products accounted for over four-fifths of the July 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 declined 0.3 percent in July.

Technical Note on July data: Consumer Price Index data for July 2001 released today reflect adjustments that correct errors found in the data on sales taxes used in the index. Prices used in the CPI are measured inclusive of sales and excise taxes wherever those apply, whether those taxes are imposed by federal, state, or local jurisdictions. In the course of a BLS review of its sales tax data, a number of instances were identified where changes in coverage had not been recorded. The most notable adjustment in this release occurs as a result of tax exemptions applied to apparel in New York. In March 2000, the State of New York eliminated the 4 percent sales tax on many apparel items priced under $110. Some local jurisdictions, including New York City, also eliminated their sales taxes on those items. Unfortunately, the prices used in the CPI were not adjusted for these changes. Note that no revisions have been made to previously published index values. Calculation and publication of revised historical indexes would have delayed the introduction of the correct sales tax values into the current CPI index. For this reason, and because the errors would not have led to revision of any monthly U.S. All Items index, the decision was made to incorporate all of the changes into this month's index.

Consumer Price Index data for August are scheduled for release on Tuesday, September 18, 2001, at 8:30 A.M. (EDT).

Planned Changes in the Consumer Price Index in 2002

Expenditure Weight Update

As announced in December 1998, the Bureau of Labor Statistics (BLS) will update the consumption expenditure weights in the Consumer Price Index for all Urban Consumers (CPI-U) and in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to the 1999-2000 period, effective with release of data for January 2002. The newer weights will replace the 1993-95 weights, which were first used in the index effective with January 1998 data. Additionally, CPI expenditure weights will be updated at two-year intervals subsequent to the 2002 updating. Thus, for example, CPI expenditure weights will be updated to the 2001-02 period effective with release of CPI data for January 2004.

Historically, the introduction of a comprehensive new set of expenditure weights attached to the categories of goods and services in the CPI "market basket" has taken place in the context of the periodic major revisions of the index. Such major revisions have taken place approximately once each decade-in 1940, 1953, 1964, 1978, 1987 and, most recently, in 1998.

The goal in employing more current expenditure weights is to have the CPI reflect, as much as possible, the inflation currently experienced by consumers. More specifically, the use of more current weights will help to ensure that the relative importance of CPI item categories, such as food away from home, college tuition, or medical care services, more accurately reflects how consumers are allocating their spending.

Publication of Overlap CPIs

For the first six months of 2002, BLS will continue to calculate and publish selected CPI-U and CPI-W "overlap" indexes on a not seasonally adjusted basis. These indexes will be compiled using the 1993-95 expenditure pattern that was introduced into the CPI in 1998. Comparison of these index series to the corresponding updated series will enable users of the CPI to observe the effects of the expenditure weight change. The subsequent expenditure updates scheduled in 2004 and every two years thereafter also will be accompanied by the publication of overlap indexes for a six-month period using the previous expenditure pattern.

Publication of CPI for the Phoenix Area

Effective with release of the July 2002 Consumer Price Index (CPI), BLS will initiate publication of consumer price data specific to the Phoenix-Mesa, Arizona, Metropolitan Statistical Area. As with the national CPI and other local area CPIs, data will be published for each of two population groups, that for all urban consumers (CPI-U) and that for urban wage earners and clerical workers (CPI-W). The Phoenix-Mesa CPI will be published on a semi-annual basis with a reference base of December 2001 = 100. The same amount of item detail will be available for Phoenix- Mesa as is presently available for all other areas published on a semi- annual basis.

Change to Published Item Structure

Effective with release of the January 2002 CPI, BLS will begin publishing an item index for leased cars and trucks. This index series will be available monthly at the U.S. City Average area level for both the CPI-U and CPI-W with a December 2001 = 100 reference base.

Facilities for Sensory Impaired

Information from this release will be made available to sensory impaired individuals upon request. Voice phone: 202-691- 5200, Federal Relay Services: 1-800-877-8339. For a recorded message of Summary CPI data, call (202) 691-5200.