Aug CPI 2008

CONSUMER PRICE INDEX: AUGUST 2008

The Consumer Price Index for All Urban Consumers (CPI-U) decreased
0.4 percent in August, before seasonal adjustment, the Bureau of Labor
Statistics of the U.S. Department of Labor reported today. The August
level of 219.086 (1982-84=100) was 5.4 percent higher than in August 2007.

The Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W) decreased 0.5 percent in August, prior to seasonal adjustment.
The August level of 215.247 (1982-84=100) was 5.9 percent higher than in
August 2007.

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U)
decreased 0.2 percent in August on a not seasonally adjusted basis. The
August level of 125.843 (December 1999=100) was 4.7 percent higher than in
August 2007. Please note that the indexes for the post-2006 period are
subject to revision.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U decreased 0.1 percent in
August, following a 0.8 percent increase in July. The index for energy
fell 3.1 percent in August after three consecutive sharp increases. The
gasoline index declined by 4.2 percent in August but is 35.6 percent
higher than in August 2007. The index for household energy, which was up
3.8 percent in July, declined 1.6 percent in August. The food index
advanced 0.6 percent in August after rising 0.9 percent in July. The
index for food at home rose 0.8 percent in August after a 1.2 percent
increase in July and is up 7.5 percent over the past year. The index for
all items less food and energy increased 0.2 percent in August after
increasing 0.3 percent in July. A downturn in the index for lodging away
from home was responsible for almost half of the smaller increase.
Deceleration in the indexes for new vehicles, apparel, and telephone
services also contributed. Partly offsetting these were larger increases
in the indexes for medical care and recreation.

Table A. Percent changes in CPI for All Urban Consumers (CPI-U)


Seasonally adjusted


Expenditure Compound
Category Changes from preceding month annual Un-
rate adjusted
3-mos. 12-mos.
Feb. Mar. Apr. May June July Aug. ended ended
2008 2008 2008 2008 2008 2008 2008 Aug. 2008 Aug. 2008

All items.......... .0 .3 .2 .6 1.1 .8 -.1 7.2 5.4
Food and beverages .4 .2 .9 .3 .7 .9 .6 9.1 5.9
Housing........... .2 .4 .3 .5 .5 .6 -.1 4.2 3.8
Apparel........... -.3 -1.3 .5 -.3 .1 1.2 .5 7.4 1.7
Transportation.... -.7 .7 -.7 2.0 3.8 1.7 -1.5 16.8 12.1
Medical care...... .1 .1 .2 .2 .2 .1 .2 2.1 3.3
Recreation........ .1 .3 -.1 .1 .1 .4 .5 4.4 2.4
Education and
communication.. .1 .3 .4 .4 .5 .5 .2 5.0 3.6
Other goods and
services....... .2 .4 .5 .4 .4 .4 .2 4.0 4.1
Special indexes:
Energy............ -.5 1.9 .0 4.4 6.6 4.0 -3.1 32.9 27.2
Food.............. .4 .2 .9 .3 .8 .9 .6 9.6 6.1
All items less
food and energy .0 .2 .1 .2 .3 .3 .2 3.4 2.5

During the first eight months of 2008, the CPI-U rose at a 5.1
percent seasonally adjusted annualized rate (SAAR). This compares with a
4.1 percent increase for the 12 months ending December 2007. The energy
index rose at a 22.4 percent SAAR in the first eight months of 2008 after
increasing 17.4 percent in 2007. Gasoline prices increased at a 22.1
percent SAAR in 2008 after a 29.6 percent increase in 2007, while natural
gas prices rose at a 46.3 percent SAAR after decreasing 0.4 percent in
2007. The food index increased at a 7.5 SAAR for the first eight months
of 2008 after increasing 4.9 percent in 2007. Excluding food and energy,
the CPI-U has advanced at a 2.5 percent SAAR in 2008 following a 2.4
percent increase in 2007.

The food and beverages index rose 0.6 percent in August following a
0.9 percent increase in July. The index for food at home increased 0.8
percent, following a 1.2 percent rise in July. Four of the six grocery
store food groups increased less in August than in July. Most notable
were a downturn in the index for cereals and bakery products, which
declined 0.1 percent in August after a 1.8 percent increase in July, and a
smaller increase in the index for dairy and related products, up 0.4
percent in August after a 1.6 percent increase in July. The index for
meats, poultry, fish and eggs increased 1.0 percent for the second
consecutive month. The fruits and vegetables index increased more rapidly
in August, up 2.1 percent following a 1.2 percent increase in July. The
food away from home index decelerated in August, up 0.3 percent after a
0.6 percent increase in July, while the index for alcoholic beverages
increased 0.4 percent for the second straight month.

The index for housing declined 0.1 percent in August after a 0.6
percent increase in July. The shelter index increased 0.1 percent in
August after a 0.2 percent increase in July. The smaller increase was due
to a downturn in the lodging away from home index, which fell 1.1 percent
in August after a 0.7 percent increase in July. The indexes for rent and
for owners' equivalent rent duplicated their July increases of 0.3 percent
and 0.1 percent, respectively. The index for household energy declined
1.6 percent in August, but is still 17.3 percent above its August 2007
level. Within household energy, the indexes for fuel oil and for natural
gas fell substantially, declining 9.6 percent and 5.8 percent
respectively. The index for electricity increased 1.2 percent in August
following a 2.5 percent increase in July. The index for household
furnishings and operations, which rose 0.4 percent in July, increased 0.2
percent in August.

The transportation index turned down in August, declining 1.5 percent
following three straight substantial increases. The index for gasoline
decreased 4.2 percent following a 4.1 percent increase in July. (Prior
to seasonal adjustment, gasoline prices fell 7.4 percent in August but are
35.6 percent above their August 2007 level.) The index for new vehicles
declined 0.6 percent in August after a 0.2 percent increase in July, with
the index for new cars virtually unchanged and the index for new trucks
declining 1.2 percent. The index for used cars and trucks fell 0.3
percent in August following a 0.1 percent decline in July. The indexes
for new vehicles and for used cars and trucks each declined 1.3 percent
since August 2007. The index for public transportation increased 1.1
percent in August, the same increase as in July, mostly due to a 1.6
percent increase in the index for airline fare. (Prior to seasonal
adjustment, the index for airline fare decreased 0.9 percent in August and
is 20.9 percent higher than in August 2007.)

The index for apparel rose 0.5 percent in August following a 1.2
percent increase in July. (Prior to seasonal adjustment, apparel prices
rose 1.8 percent in August and are 1.7 percent higher than in August
2007.) The index for women's and girls' apparel increased 2.0 percent in
August, while the index for men's and boys' apparel rose 0.3 percent.

The medical care index rose 0.2 percent in August after rising 0.1
percent in July, and is 3.3 percent higher than a year ago. The index for
medical care commodities--prescription drugs, nonprescription drugs, and
medical supplies-increased 0.1 percent in August after a 0.2 percent
decrease in July. The index for medical care services increased 0.3
percent in August. The indexes for professional services and for hospital
and related services increased 0.3 percent and 0.6 percent, respectively.

The index for recreation increased 0.5 percent in August, following a
0.4 percent increase in July. The index for video and audio rose 0.5
percent in August after being virtually unchanged in July. The indexes
for pets, pet products and services and for admissions both rose 1.3
percent in August, while the index for sporting goods declined 0.7
percent.

The index for education and communication increased 0.2 percent in
August after a 0.5 percent increase in July. The index for education rose
0.6 percent, reflecting increases of 3.4 percent for college textbooks and
0.3 percent for college tuition and fees. (Prior to seasonal adjustment,
charges for college tuition rose 2.6 percent in August and were 6.3
percent higher than a year ago.) The communication index, which increased
0.5 percent in July, declined 0.2 percent in August. Within
communication, the telephone services index was virtually unchanged in
August after a 0.7 percent increase in July, and the information
technology hardware and services index declined 0.7 percent after a 0.2
percent increase in July.

The index for other goods and services increased 0.2 percent in
August after three consecutive increases of 0.4 percent. The deceleration
was caused by the index for tobacco and smoking products, which rose 0.1
percent in August after a 1.2 percent increase in July.


CPI for Urban Wage Earners and Clerical Workers (CPI-W)

On a seasonally adjusted basis, the CPI for Urban Wage Earners and
Clerical Workers decreased 0.2 percent in August.

Table B. Percent changes in CPI for Urban Wage Earners and
Clerical Workers (CPI-W)


Seasonally adjusted


Expenditure Compound
Category Changes from preceding month annual Un-
rate adjusted
3-mos. 12-mos.
Feb. Mar. Apr. May June July Aug. ended ended
2008 2008 2008 2008 2008 2008 2008 Aug. 2008 Aug. 2008

All items.......... .0 .4 .2 .7 1.2 .9 -.2 8.0 5.9
Food and beverages .3 .2 .9 .3 .8 .9 .6 9.6 6.0
Housing........... .2 .5 .4 .5 .5 .7 .0 4.6 4.2
Apparel........... -.3 -1.2 .2 -.2 .0 .8 1.0 7.6 1.8
Transportation.... -.7 .7 -.7 2.1 4.0 1.8 -1.7 17.4 12.8
Medical care...... .1 .1 .2 .1 .2 .1 .3 2.3 3.4
Recreation........ .1 .3 -.2 .0 .2 .4 .5 4.4 2.3
Education and
communication.. .1 .2 .4 .3 .5 .5 .2 5.2 3.3
Other goods and
services....... .3 .4 .4 .5 .6 .5 .2 5.1 4.6
Special indexes:
Energy............ -.7 1.9 -.2 4.5 6.8 4.0 -3.2 33.8 27.8
Food.............. .3 .2 1.0 .3 .8 .9 .6 9.9 6.2
All items less
food and energy .0 .1 .1 .2 .3 .3 .2 3.5 2.5

Consumer Price Index data for September are scheduled for release on
Thursday, October 16, 2008, at 8:30 A.M. (EDT).


Facilities for Sensory Impaired


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.



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


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











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 before adjustment 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 2003 through December 2007 were replaced in January 2008.
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: 48 of the 73 components
are seasonally adjusted for 2008.




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.

For the seasonal factors introduced in January 2008, BLS adjusted 20
series using Intervention Analysis Seasonal Adjustment, including selected
food and beverage items, motor fuels, electricity and vehicles. For
example, this procedure was used for the Motor fuel series to offset the
effects of events such as damage to oil refineries from Hurricane Katrina.