June 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) increased 0.1 percent in June, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The June level of 179.9 (1982-84=100) was 1.1 percent higher than its level in June 2001.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) also rose 0.1 percent in June, prior to seasonal adjustment. The June level of 175.9 was 0.7 percent higher than the index in June 2001.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U increased 0.1 percent in June after registering no change in May. The indexes for food and for energy, each of which declined in May, were both unchanged in June. An increase of 0.3 percent in the index for petroleum-based energy was offset by a 0.2 percent decline in the index for energy services. The index for food at home declined 0.2 percent as four of the six grocery store food groups registered declines. Excluding food and energy, the CPI-U rose 0.1 percent in June after increasing 0.2 percent in May. Smaller increases in the indexes for shelter and for medical care, coupled with declines in the indexes for recreation and for communication, more than offset a sharp upturn in the index for tobacco and smoking products.

See pages 5 through 7 for notes on changes introduced into the CPI in 2002 and for a note on a new supplemental index of consumer price change.

Consumer prices increased at a seasonally adjusted annual rate (SAAR) of 2.5 percent in the second quarter after advancing at a 3.0 percent rate in the first three months of 2002. This brings the year-to-date annual rate to 2.7 percent and compares with an increase of 1.6 percent in all of 2001. The index for energy, which had declined sharply in 2001, turned up in the first half of 2002, advancing at a 16.2 percent SAAR. Petroleum- based energy costs increased at a 39.9 percent annual rate, while charges for energy services declined at a 1.2 percent annual rate. The food index rose at a 1.1 percent SAAR in the first half of 2002. The index for grocery store food prices increased at a 0.2 percent annual rate, as price increases for fruits and vegetables and for cereal and bakery products--up at annual rates of 6.4 and 2.4 percent, respectively--were largely offset by declines in the indexes for dairy products, for nonalcoholic beverages, and for other food at home. The index for meats, poultry, fish, and eggs was unchanged.

The CPI-U excluding food and energy advanced at a 1.9 percent SAAR in the second quarter, following an increase at a 2.1 percent rate in the first three months of 2002. The advance at a 2.0 percent SAAR for the first half of 2002 compares with a 2.7 percent rise in all of 2001. This moderation reflects a larger decrease in the index for commodities less food and energy commodities, which declined at a 1.7 percent SAAR in the first half of 2002 after declining 0.3 percent in all of 2001, as well as a smaller increase in the index for services less energy services. The latter index rose at a 3.6 percent SAAR in the first half of 2002 after increasing 4.0 percent in all of 2001, largely as a result of a smaller increase in shelter costs--up at a SAAR of 3.5 percent thus far in 2002 after increasing 4.2 percent in all of 2001. The annual rates for selected groups for the last seven and « years are shown below.

The food and beverages index increased 0.1 percent in June. The index for food at home declined for the second consecutive month--down 0.2 percent in June. The index for fruits and vegetables, which had risen sharply in each of the first three months of 2002, declined for the third consecutive month, down 0.2 percent in June. Within the fruits and vegetables group, the indexes for fresh fruits and for processed fruits and vegetables declined 1.7 and 0.8 percent, respectively, more than offsetting a 1.5 percent rise in the index for fresh vegetables. The index for meats, poultry, fish, and eggs declined for the third consecutive month--down 0.4 percent in June. The indexes for beef, for pork, for poultry, and for fish and seafood all registered declines. The index for dairy products, reflecting a sharp drop in cheese prices, fell 0.6 percent in June. The index for nonalcoholic beverages declined for the second consecutive month--down 0.4 percent in June--reflecting another decrease in prices for carbonated beverages. The indexes for cereal and bakery products and for other food at home, each of which declined in May, turned up in June, advancing 0.1 and 0.5 percent, respectively. The other two components of the food and beverages index--food away from home and alcoholic beverages--increased 0.3 and 0.1 percent, respectively,

The index for housing rose 0.1 percent in June. Shelter costs, which increased 0.2 percent in May, rose 0.1 percent in June. Within shelter, the indexes for rent and for owners' equivalent rent each rose 0.3 percent, while the index for lodging away from home decreased 1.1 percent. The index for fuels and utilities declined 0.1 percent in June, reflecting a 1.1 percent drop in the index for natural gas. The indexes for fuel oil and for electricity rose 0.7 and 0.1 percent, respectively. (Prior to seasonal adjustment, natural gas and fuel oil prices declined 0.3 and 1.9 percent, respectively, while charges for electricity rose 6.2 percent.) The index for household furnishings and operations turned down in June, declining 0.3 percent.

The transportation index rose 0.1 percent in June, following a 0.4 percent decline in May, reflecting the movement in the gasoline index. The index for gasoline rose 0.4 percent in June, following a 2.8 percent decline in May. (Prior to seasonal adjustment, gasoline prices declined 1.1 percent in June after registering no change in May.) The index for new vehicles declined for the sixth consecutive month, down 0.1 percent. The index for used cars and trucks rose 0.1 percent in June, registering its first increase in six months. 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 4.2 percent. Airline fares, which had advanced in each of the first five months of 2002 after declining in each of the last six months of 2001, fell 0.6 percent in June. During the last 12 months, the index for airline fares has decreased 4.5 percent.

The index for apparel declined 0.9 percent in June, following a 0.6 percent drop in May. (Prior to seasonal adjustment, apparel prices fell 3.5 percent, largely as a result of seasonal price discounting of spring- summer apparel.)

The medical care index rose 0.2 percent in June to a level 4.5 percent above its level a year ago. The index for medical care commodities--prescription drugs, nonprescription drugs, and medical supplies--increased 0.3 percent. The index for medical care services rose 0.2 percent in June. Charges for professional services rose 0.1 percent and those for hospital and related services increased 0.3 percent.

The index for recreation declined for the second consecutive month, down 0.3 percent in June. Downturns in the indexes for sporting goods and for pets, pet products and services, coupled with another decline in prices for toys, more than offset upturns in the indexes for admissions to movies, theaters, and concerts and for admissions to sporting events--up 1.1 and 0.9 percent, respectively.

The index for education and communication increased 0.3 percent in June. Education costs rose 0.8 percent while the index for communication costs declined 0.1 percent. Within the later category, the index for telephone services, which had risen 1.1 percent in May, fell 0.1 percent in June, reflecting decreases in long distance charges. Prices for personal computers and peripheral equipment, which in May increased for the first time in more than two years, turned back down in June, declining 1.7 percent. During the last 12 months, these prices have fallen 24.2 percent.

The index for other goods and services, which declined 0.5 percent in May, increased 1.0 percent in June. Prices for cigarettes, which declined 2.9 percent in May, increased 4.3 percent in June, reflecting decreased discounting of some 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 increased 0.1 percent in June.

Consumer Price Index data for July are scheduled for release on Friday, August 16, 2002, at 8:30 A.M. (EDT).

CPI (Old Weights)

For the first six months of 2002, BLS has calculated 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 May to June 2002, the Old Weights CPI-U increased 0.1 percent while the Old Weights CPI-W increased 0.2 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.