May 2002 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 May, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The May level of 179.8 (1982-84=100) was 1.2 percent higher than its level in May 2001.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) was unchanged in May, prior to seasonal adjustment. The May level of 175.8 was 0.8 percent higher than the index in May 2001.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U was unchanged in May, following a 0.5 percent increase in April. The energy index, which had advanced sharply in each of the preceding two months, declined 0.7 percent in May. The index for petroleum-based energy decreased 2.7 percent, while the index for energy services rose 1.1 percent. The food index fell 0.2 percent in May. The index for food at home declined 0.5 percent as five of the six grocery store food groups registered declines. Excluding food and energy, the CPI-U rose 0.2 percent in May after increasing 0.3 percent in April. A smaller increase in the index for shelter and a downturn in the index for tobacco and smoking products accounted for the more moderate increase in May.

See pages 4 through 6 for notes on changes introduced into the CPI in 2002 and for a note on a new supplemental index of consumer price change.

During the first five months of 2002, the CPI-U rose at a 3.0 percent seasonally adjusted annual rate (SAAR). This compares with an increase of 1.6 percent for all of 2001. The index for energy, which declined 13.0 percent in 2001, increased at a 19.7 percent SAAR in the first five months of 2002. Petroleum-based energy costs increased at a 48.4 percent annual rate, while charges for energy services declined at a 0.9 percent annual rate. The food index has increased at a 1.4 percent SAAR thus far this year, following a 2.8 percent rise for all of 2001. Excluding food and energy, the CPI-U advanced at a 2.3 percent SAAR in the first five months, following a 2.7 percent rise in all of 2001.

The food and beverages index declined 0.2 percent in May. The index for food at home decreased 0.5 percent in May after registering no change in April. The index for fruits and vegetables, which had risen sharply in each of the first three months of 2002, declined for the second consecutive month, down 1.4 percent in May. Within the fruits and vegetables group, the index for fresh vegetables declined 6.2 percent, more than offsetting a 2.6 percent rise in the index for fresh fruits and a 0.7 percent increase in the index for processed fruits and vegetables. The indexes for cereal and bakery products, for meats, poultry, fish, and eggs, for nonalcoholic beverages, and for other food at home all registered declines in May. Within the meats, poultry, fish, and eggs category, the indexes for beef and pork fell 0.1 and 0.9 percent, respectively, while poultry prices rose 0.1 percent. The index for cereals and bakery products fell 0.1 percent in May. The index for nonalcoholic beverages fell 0.9 percent, reflecting a 2.2 percent drop in prices for carbonated beverages. The index for other food at home, which increased 1.1 percent in April, declined 1.0 percent in May. Prices for sugar and artificial sweeteners, which rose 5.0 percent in April, fell 2.7 percent in May. The index for dairy products was the only major grocery store food group to register an increase in May--up 0.2 percent. The other two components of the food and beverages index--food away from home and alcoholic beverages--each increased 0.2 percent,

The index for housing rose 0.3 percent in May. Shelter costs, which rose 0.4 percent in April, increased 0.2 percent in May. Within shelter, the indexes for rent and for lodging away from home each rose 0.3 percent, and the index for owners' equivalent rent increased 0.2 percent. The index for fuels and utilities advanced 0.8 percent in May, reflecting increases in each of the three major household fuels. The indexes for fuel oil and for electricity each rose 0.8 percent and the index for natural gas rose 1.9 percent. (Prior to seasonal adjustment, fuel oil prices declined 0.6 percent, while charges for electricity and natural gas rose 1.5 and 0.1 percent, respectively.) The index for household furnishings and operations turned up in May, advancing 0.3 percent.

The transportation index, reflecting the movement in gasoline prices, rose sharply in March and April and declined 0.4 percent in May. After advancing 8.0 and 10.1 percent in March and April, respectively, the index for gasoline fell 2.8 percent in May. (Prior to seasonal adjustment, gasoline prices were unchanged in May.) The indexes for new vehicles and for used cars and trucks each declined for the fifth consecutive month, down 0.2 and 0.3 percent, respectively. During the last 12 months, the index for new vehicles has declined 1.8 percent and the index for used cars and trucks has fallen 4.6 percent. Airline fares increased for the fifth consecutive month--up. 1.8 percent in May--following declines in each of the last six months of 2001.

The index for apparel declined 0.6 percent in May, the same as in April. (Prior to seasonal adjustment, apparel prices fell 1.3 percent, largely as a result of the discounting of women's and girls' apparel.)

The medical care index rose 0.5 percent in May to a level 4.7 percent above its level a year ago. The index for medical care commodities-- prescription drugs, nonprescription drugs, and medical supplies--increased 0.2 percent. The index for medical care services rose 0.6 percent in May. Charges for professional services rose 0.2 percent and those for hospital and related services increased 0.8 percent.

The index for recreation decreased 0.1 percent in May. Declines in the indexes for toys--down 2.3 percent--and for admissions to movies, theaters, concerts, and sporting events--down 0.3 percent--were largely responsible for the May decrease.

The index for education and communication increased 0.6 percent in May, following declines in each of the previous two months. Education costs rose 0.4 percent and the index for communication costs increased 0.8 percent. Within the later category, the index for telephone services, which had declined in March and April, rose 1.1 percent in May, reflecting a 2.5 percent increase in local charges. Prices for personal computers and peripheral equipment recorded their first monthly increase since December 1999--up 0.4 percent in May. During the last 12 months, however, these prices have declined 24.3 percent.

The index for other goods and services, which rose 1.5 percent in April, declined 0.5 percent in May. Prices for cigarettes, which increased 6.8 percent in April, declined 2.9 percent in May, reflecting increased discounting of selected major brands.

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 0.1 percent in May.

Consumer Price Index data for June are scheduled for release on Friday, July 19, 2002, at 8:30 A.M. (EDT).

CPI (Old Weights)

For the first six months of 2002, BLS also will calculate Old Weights CPI-U and Old Weights CPI-W based on the 1993-95 expenditure pattern used in the CPI from 1998 through 2001. These Old Weight data are contained in tables 1(OW)-4(OW). From April to May 2002, the Old Weights CPI-U was unchanged, while the Old Weights CPI-W declined 0.1 percent. Note these series are not seasonally adjusted.

Changes in the Consumer Price Index in 2002

Expenditure Weight Update

As announced in December 1998, the Bureau of Labor Statistics (BLS) has updated 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 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 began publishing an item index for leased cars and trucks. This index series is 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.

NOTE ON A NEW, SUPPLEMENTAL INDEX OF CONSUMER PRICE CHANGE

The Bureau of Labor Statistics will begin publishing a 1consumer price index (CPI) called the Chained Consumer Price Index for All Urban Consumers, effective with release of July data in August 2002. Designated the C-CPI-U, the index will supplement the existing indexes already produced by the BLS: the CPI for All Urban Consumers (CPI-U) and the CPI for Urban Wage Earners and Clerical Workers (CPI-W).

The C-CPI-U will employ a Tornqvist formula and utilize expenditure data in adjacent time periods in order to reflect the effect of any substitution that consumers make across item categories in response to changes in relative prices. The new measure, said to be a "superlative" index, is designed to be a closer approximation to a "cost-of-living" index than the present measures. The use of expenditure data for both a base period and the current period in order to average price change across item categories distinguishes the C-CPI-U from the existing CPI measures, which use only a single expenditure base period to compute the price change over time. In 1999, the BLS introduced a geometric mean estimator for averaging prices within most of the index's item categories in order to approximate the effect of consumers' responses to changes in relative prices within these item categories. The geometric mean estimator will be used in the C-CPI-U in the same item categories in which it is now used in the CPI-U and CPI-W. (See Monthly Labor Review, October 1998, pp. 3-7.)

Expenditure data required for the calculation of the C-CPI-U are available only with a time lag. Thus, the C-CPI-U will be issued first in preliminary form using the latest available expenditure data at that time and will be subject to two subsequent revisions. Accordingly, at the time of its introduction in August, "final" values of the C-CPI-U will be issued for the 12 months of 2000, "interim" values will be issued for the 12 months of 2001, and "initial" values will be issued for January-July 2of 2002. In February 2003, with release of the January 2003 index, revised interim indexes for the 12 months of 2002 will be published, and the index values for 2001 will be revised and will become final. Then, in February 2004, when the monthly expenditure data from calendar year 2002 become available, C-CPI-U indexes for the 12 months of 2002 will be issued in final form and values for the 12 months of 2003 will be revised and issued as interim. The C-CPI-U index revisions are expected to be small, but in principle each monthly index could be revised from its previously published level.

BLS previously has calculated superlative indexes on an experimental basis, although these are not comparable to the C-CPI-U in all computational details. (See, for example, Monthly Labor Review, December 1993, pp. 25-33.) Based on BLS research, the C-CPI-U is estimated to increase at an average annual rate of 0.1 to 0.2 percentage point less than the CPI-U.

The C-CPI-U will be issued for national averages only and will not be seasonally adjusted. It will employ a December 1999=100 reference base. Data for periods prior to December 1999 will not be calculated. The component series that will be published are listed below:

All items Medical care Food and beverages Medical care commodities Food Medical care services Food at home Recreation Food away from home Education and communication Alcoholic beverages Education Housing Communication Shelter Other goods and services Fuels and utilities Services Household furnishings Commodities and operations Durables Apparel Nondurables Transportation All items less food and energy Private transportation Energy Public transportation

These indexes will be published monthly in the CPI news release and the CPI Detailed Report, and the series will be available electronically at the same site as other CPI data: http://www.bls.gov/cpi/.

Or contact Patrick Jackman or Rob Cage either by telephone at (202) 691- 6952 or by electronic mail at Jackman_P@bls.gov or Cage_R@bls.gov .

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.