Consumer Price Index Summary
CONSUMER PRICE INDEX: MAY 2007
The Consumer Price Index for All Urban Consumers (CPI-U) increased
0.6 percent in May, before seasonal adjustment, the Bureau of Labor
Statistics of the U.S. Department of Labor reported today. The May level
of 207.949 (1982-84=100) was 2.7 percent higher than in May 2006.
The Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W) increased 0.8 percent in May prior to seasonal adjustment. The
May level of 203.661 (1982-84=100) was 2.8 percent higher than in May
2006.
The Chained Consumer Price Index for All Urban Consumers (C-CPI-U)
increased 0.4 percent in May on a not seasonally adjusted basis. The May
level of 120.032 (December 1999=100) was 2.3 percent higher than in May
2006. Please note that the indexes for the post-2005 period are subject
to revision.
CPI for All Urban Consumers (CPI-U)
On a seasonally adjusted basis, the CPI-U advanced 0.7 percent in
May, following a 0.4 percent increase in April. The index for energy
increased sharply for the third consecutive month--up 5.4 percent in May.
The index for petroleum-based energy rose 9.8 percent while the index for
energy services declined 0.2 percent. The food index rose 0.3 percent in
May, slightly less than in April. The index for all items less food and
energy advanced 0.1 percent in May, following a 0.2 percent rise in April.
Smaller increases in the indexes for shelter and medical care were
responsible for the moderation.
Table A. Percent changes in CPI for Urban Consumers (CPI-U)
Seasonally adjusted Un-
Compound adjusted
Expenditure Changes from preceding month annual rate 12-mos.
Category 2006 2007 3-mos. ended ended
Nov. Dec. Jan. Feb. Mar. Apr. May May '07 May '07
All Items .0 .4 .2 .4 .6 .4 .7 7.0 2.7
Food and beverages -.1 -.1 .7 .8 .3 .4 .3 4.2 3.9
Housing .4 .4 .2 .4 .2 .2 .2 2.5 3.3
Apparel -.1 .2 .3 .5 -1.0 -.3 -.3 -6.6 -.8
Transportation -.8 1.7 -.8 .1 2.8 1.2 2.8 30.6 1.3
Medical care .2 .2 .8 .5 .1 .4 .3 3.3 4.0
Recreation .1 -.3 .1 .0 .0 .1 .2 .9 .4
Education and
communication -.2 .2 -.1 .3 .5 .3 .6 5.3 2.7
Other goods and
services .1 .6 .8 .2 .2 .3 .3 3.0 3.9
Special Indexes
Energy -.2 4.2 -1.5 .9 5.9 2.4 5.4 71.0 4.7
Food -.1 .0 .7 .8 .3 .4 .3 4.2 3.9
All Items less
food and energy .1 .1 .3 .2 .1 .2 .1 1.6 2.2
During the first five months of 2007, the CPI-U rose at a 5.5 percent
seasonally adjusted annual rate (SAAR). This compares with an increase of
2.5 percent for all of 2006. The acceleration thus far this year was due
to larger increases in the energy and food components. The index for
energy advanced at a 36.0 percent SAAR in the first five months of 2007
compared with 2.9 percent in 2006. Petroleum-based energy costs increased
at a 63.9 percent annual rate and charges for energy services rose at a
6.8 percent annual rate. The food index has increased at a 6.2 percent
SAAR thus far this year, following a 2.1 percent rise for all of 2006.
Excluding food and energy, the CPI-U advanced at a 2.1 percent SAAR in the
first five months, following a 2.6 percent rise for all of 2006.
The food and beverages index rose 0.3 percent in May. The index for
food at home increased 0.4 percent, following a 0.5 percent rise in April.
The index for meats, poultry, fish, and eggs registered a substantial
increase for the third consecutive month--up 1.2 percent in May. The
indexes for pork and for other meats turned up in May after declining in
April, advancing 2.0 and 0.8 percent, respectively. Poultry prices rose
0.8 percent; beef prices slowed from their recent trend, increasing 0.1
percent. Through the first five months of 2007, beef prices have risen
5.1 percent, poultry prices, 4.3 percent, and pork prices, 3.4 percent.
The index for fruits and vegetables, which rose 0.4 percent in April,
declined 0.5 percent in May. (Prior to seasonal adjustment, prices for
fruits and vegetables rose 1.0 percent.) The indexes for fresh vegetables
and for processed fruits and vegetables declined 1.8 and 0.3 percent,
respectively, while the index for fresh fruits increased 0.7 percent. The
index for dairy products increased 0.5 percent as a 2.2 percent increase
in milk prices more than offset a 0.4 percent decline in prices for
cheese. The index for nonalcoholic beverages rose 0.9 percent, reflecting
an upturn in prices for carbonated drinks and for coffee. The indexes for
cereal and bakery products and for other food at home were each virtually
unchanged in May. 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 increased 0.2 percent in May, the same as in
each of the two preceding months. The index for shelter rose 0.2 percent
in May, following an increase of 0.3 percent in April. Within shelter,
the index for rent rose 0.3 percent; the index for owners' equivalent
rent, 0.1 percent; and the index for lodging away from home, 1.6 percent.
The index for household energy declined 0.1 percent as a 0.9 percent
decrease in the index for natural gas was partially offset by increases in
the indexes for fuel oil and for electricity--up 1.9 and 0.1 percent,
respectively. (Prior to seasonal adjustment, charges for electricity rose
1.7 percent, reflecting the switch to seasonal rates in some areas.) The
index for household furnishings and operations was virtually unchanged in
May.
The transportation index rose sharply for the third consecutive month-
-up 2.8 percent in May. A 10.4 percent increase in the index for motor
fuels was partially offset by declines in the indexes for new and used
vehicles and for public transportation. (Prior to seasonal adjustment,
gasoline prices rose 9.5 percent. As of May, the price of gasoline was
4.0 percent higher than its previous peak level recorded in July 2006.)
The index for new vehicles declined 0.2 percent, while the index for used
cars and trucks increased 0.1 percent. During the last 12 months, new
vehicle prices have declined 1.0 percent and prices for used cars and
trucks, 4.6 percent. The index for public transportation declined 0.5
percent in April, reflecting a 0.6 percent decrease in the index for
airline fares. (Prior to seasonal adjustment, airline fares rose 0.4
percent.)
The index for apparel declined 0.3 percent in May the same as in
April. (Prior to seasonal adjustment, apparel prices decreased 1.2
percent. Prices for women's and girls' apparel registered the largest
decline--down 2.3 percent.)
Medical care costs rose 0.3 percent in May and are 4.0 percent higher
than a year ago. The index for medical care commodities--prescription
drugs, nonprescription drugs, and medical supplies--was virtually
unchanged. The index for medical care services rose 0.4 percent. The
indexes for professional services and for hospital and related services
increased 0.2 and 0.7 percent, respectively.
The index for recreation rose 0.2 percent in May. The index for
cable and satellite television and radio service increased 1.0 percent.
This increase was partially offset by a 3.1 percent decline in the index
for televisions. Television prices have declined 26.9 percent during the
12 month period ended in May.
The index for education and communication advanced 0.6 percent in
May. Educational costs rose 0.4 percent and the index for communication
costs increased 0.7 percent. Within the communication group, the index
for telephone services rose 0.9 percent. Land-line local service charges
increased 0.3 percent, land-line long distance charges advanced 2.7
percent, while wireless telephone service charges declined 0.1 percent.
The indexes for personal computers and peripheral equipment declined 2.0
percent. The index for internet services and electronic information
providers advanced for the third consecutive month--up 0.1 percent in May-
-but was 23.6 percent lower than a year ago.
The index for other goods and services increased 0.3 percent in May.
The index for tobacco and smoking products rose 0.4 percent, following a
0.4 percent decline in April. The index for miscellaneous personal
services rose 0.3 percent, reflecting increases for legal and for
financial services, each up 0.5 percent.
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 0.8 percent in May.
Table B. Percent changes in CPI for Urban Wage Earners and Clerical
Workers (CPI-W)
Seasonally adjusted Un-
Compound adjusted
Expenditure Changes from preceding month annual rate 12-mos.
Category 2006 2007 3-mos. ended ended
Nov. Dec. Jan. Feb. Mar. Apr. May May '07 May '07
All Items .1 .5 .1 .4 .8 .5 .8 8.5 2.8
Food and beverages -.1 -.1 .7 .8 .3 .4 .4 4.6 3.9
Housing .4 .4 .3 .4 .3 .2 .2 2.8 3.4
Apparel -.1 .2 -.1 .5 -.8 -.4 -.3 -5.9 -.8
Transportation -.9 1.9 -1.0 .0 3.0 1.4 3.1 34.7 1.4
Medical care .2 .1 .8 .5 .1 .4 .3 3.3 4.1
Recreation .2 -.3 .1 .0 -.1 .0 .2 .5 .4
Education and
communication -.3 .1 -.1 .3 .4 .3 .6 5.3 2.5
Other goods and
Services .0 .8 1.0 .4 .2 .1 .3 2.8 4.2
Special Indexes
Energy -.2 4.3 -1.5 .8 6.2 2.6 5.8 76.2 4.9
Food -.1 -.1 .6 .8 .3 .4 .4 4.7 4.0
All Items less
food and energy .0 .1 .2 .2 .1 .2 .1 1.6 2.1
Consumer Price Index data for June are scheduled for release on
Wednesday, July 18, 2007, at 8:30 A.M. (EDT).
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Consumer Price Index Levels to Three Decimal Places
Effective with the January 2007 release of the Consumer Price Index
(CPI), the Bureau of Labor Statistics began computing percent changes
based upon three decimal place indexes rather than one decimal place
indexes. This change applied to the All Items Consumer Price Index and
all component indexes for the CPI-U, CPI-W, and C-CPI-U, for the U.S. City
Average and for all other published areas. In addition, CPI index values
were displayed to three decimal places in all paper and electronic
publications. As in the past, percent changes were rounded and displayed
to one decimal place.
The change in procedure addressed a rounding issue that resulted in
published percent changes that were 0.1 percentage point higher or lower
than the same percent changes based on unrounded index values (i.e.,
indexes to three or more decimal places). These differences were
particularly important when percent changes were very small. Publishing
the index values to three decimal places, and using these values to
compute percent changes, essentially eliminated the possibility of
rounding differences. This change only affected the presentation of the
index data. Index values continue to be calculated from underlying price
data in the same manner as in the past, and no systematic upward or
downward effect on the data was introduced. The levels of the indexes are
affected only in that they are published to three decimal places rather
than one place. Official CPI data previously published were not be
revised.
For more information contact Patrick Jackman or Ken Stewart either by
telephone at (202) 691-6952 and (202) 691-6966, respectively, or by
electronic mail at Jackman.Patrick@bls.gov or Stewart.Ken@bls.gov
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Note on Sampling Error in the Consumer Price Index
The CPI is a statistical estimate that is subject to sampling error
because it is based upon a sample of retail prices and not the complete
universe of all prices. BLS calculates and publishes estimates of the 1-
month, 2-month, 6-month and 12-month percent change standard errors
annually, for the CPI-U. These standard error estimates can be used to
construct confidence intervals for hypothesis testing. For example, the
estimated standard error of the 1 month percent change is 0.06 percent for
the U.S. All Items Consumer Price Index. This means that if we repeatedly
sample from the universe of all retail prices using the same methodology,
and estimate a percentage change for each sample, then 95% of these
estimates would be within 0.12 percent of the 1 month percentage change
based on all retail prices. For a 1-month change of 0.2 percent in the
All Items CPI for All Urban Consumers, we are 95 percent confident that
the actual percent change based on all retail prices would fall between
0.08 and 0.32 percent. For the latest data, including information on how
to use the estimates of standard error, see "Variance Estimates for
Changes in the Consumer Price Index, January 2005- December 2005 in the
CPI Detailed Report, February 2006. These data are available on the CPI
home page (http://www.bls.gov/cpi), using the following link
http://www.bls.gov/cpi/cpivar2006.pdf
__________________________________________________________________________________________________
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.
__________________________________________________________________________________________________
Brief Explanation of the CPI
The Consumer Price Index (CPI) is a measure of the average change in
prices over time of goods and services purchased by households. The
Bureau of Labor Statistics publishes CPIs for two population groups: (1)
the CPI for Urban Wage Earners and Clerical Workers (CPI-W), which covers
households of wage earners and clerical workers that comprise
approximately 32 percent of the total population and (2) the CPI for All
Urban Consumers (CPI-U) and the Chained CPI for All Urban Consumers (C-CPI-
U), which cover approximately 87 percent of the total population and
include in addition to wage earners and clerical worker households, groups
such as professional, managerial, and technical workers, the self-
employed, short-term workers, the unemployed, and retirees and others not
in the labor force.
The CPIs are based on prices of food, clothing, shelter, and fuels,
transportation fares, charges for doctors' and dentists' services, drugs,
and other goods and services that people buy for day-to-day living.
Prices are collected in 87 urban areas across the country from about
50,000 housing units and approximately 23,000 retail establishments-
department stores, supermarkets, hospitals, filling stations, and other
types of stores and service establishments. All taxes directly associated
with the purchase and use of items are included in the index. Prices of
fuels and a few other items are obtained every month in all 87 locations.
Prices of most other commodities and services are collected every month in
the three largest geographic areas and every other month in other areas.
Prices of most goods and services are obtained by personal visits or
telephone calls of the Bureau's trained representatives.
In calculating the index, price changes for the various items in each
location are averaged together with weights, which represent their
importance in the spending of the appropriate population group. Local
data are then combined to obtain a U.S. city average. For the CPI-U and
CPI-W separate indexes are also published by size of city, by region of
the country, for cross-classifications of regions and population-size
classes, and for 27 local areas. Area indexes do not measure differences
in the level of prices among cities; they only measure the average change
in prices for each area since the base period. For the C-CPI-U data are
issued only at the national level. It is important to note that the CPI-U
and CPI-W are considered final when released, but the C-CPI-U is issued in
preliminary form and subject to two annual revisions.
The index measures price change from a designed reference date. For
the CPI-U and the CPI-W the reference base is 1982-84 equals 100.0. The
reference base for the C-CPI-U is December 1999 equals 100.
An increase of 16.5 percent from the reference base, for example, is shown
as 116.5. This change can also be expressed in dollars as follows: the
price of a base period market basket of goods and services in the CPI has
risen from $10 in 1982-84 to $11.65.
For further details visit the CPI home page on the Internet at
http://www.bls.gov/cpi/ or contact our CPI Information and Analysis
Section on (202) 691-7000.
__________________________________________________________________________________________________
Calculating Index Changes
Movements of the indexes from one month to another are usually
expressed as percent changes rather than changes in index points, because
index point changes are affected by the level of the index in relation to
its base period while percent changes are not. The example below illustrates
the computation of index point and percent changes.
Percent changes for 3-month and 6-month periods are expressed as
annual rates and are computed according to the standard formula for
compound growth rates. These data indicate what the percent change would
be if the current rate were maintained for a 12-month period.
Index Point Change
CPI 202.416
Less previous index 201.800
Equals index point change .616
Percent Change
Index point difference .616
Divided by the previous index 201.800
Equals 0.003
Results multiplied by one hundred 0.003x100
Equals percent change 0.3
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Regions Defined
The states in the four regions shown in Tables 3 and 6 are listed below.
The Northeast--Connecticut, Maine, Massachusetts, New Hampshire, New York,
New Jersey, Pennsylvania, Rhode Island, and Vermont.
The Midwest--Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota,
Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin.
The South--Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky,
Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South
Carolina, Tennessee, Texas, Virginia, West Virginia, and the District of
Columbia.
The West--Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana,
Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.
__________________________________________________________________________________________________
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. Seasonally
adjusted indexes and seasonal factors are computed annually. Each year,
the last 5 years of seasonally adjusted data are revised. Data from
January 2002 through December 2006 were replaced in January 2007.
Exceptions to the usual revision schedule were: the updated seasonal data
at the end of 1977 replaced data from 1967 through 1977; and, in January
2002, dependently seasonally adjusted series were revised for January 1987-
December 2001 as a result of a change in the aggregation weights for
dependently adjusted series. For further information, please see
"Aggregation of Dependently Adjusted Seasonally Adjusted Series," in the
October 2001 issue of the CPI Detailed Report.
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 in the aggregation of
the dependent series for the last 5 years, but the seasonally adjusted
indexes will be used before that period. Note: 44 of the 73 components
are seasonally adjusted for 2007.
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.
In January 2007, BLS adjusted 37 series using Intervention Analysis
Seasonal Adjustment, including selected food and beverage items, fuel oil,
motor fuels, vehicles, jewelry, admission to sporting events and
educational books and supplies. For example, this procedure was used for
the Motor fuel series to offset the effects of damage to oil refineries
from Hurricane Katrina, as well as the effects of implementing new fuel
requirements in the United States.
For a complete list of Intervention Analysis Seasonal Adjustment
series and explanations, please refer to the article "Intervention
Analysis Seasonal Adjustment", located on our website at:
http://www.bls.gov/cpi/cpisapage.htm.
For additional information on seasonal adjustment in the CPI, please
write to the Bureau of Labor Statistics, Division of Consumer Prices and
Price Indexes, Washington, DC 20212 or contact Jeff Wilson on (202) 691-
6968 by e-mail at Wilson.Jeff@bls.gov. If you have general questions
about the CPI, please call our information staff at (202) 691-7000.
