Transmission of material in this release is embargoed until                                        
8:30 a.m. (EDT) September 13, 2018      USDL-18-1453

Technical information: (202) 691-7000  •  cpi_info@bls.gov  •  www.bls.gov/cpi
Media Contact:         (202) 691-5902  •  PressOffice@bls.gov

CONSUMER PRICE INDEX – AUGUST 2018

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in
August on a seasonally adjusted basis, the same increase as in July, the U.S.
Bureau of Labor Statistics reported today. Over the last 12 months, the all items
index rose 2.7 percent before seasonal adjustment.

Increases in the indexes for shelter and energy were the main contributors to the
seasonally adjusted monthly increase in the all items index. The energy index
increased 1.9 percent in August; a 3.0-percent increase in the gasoline index was
the largest factor, but the other energy component indexes also rose. The shelter
index increased 0.3 percent in August, the same increase as in July. The food
index rose only slightly in August, with the index for food at home unchanged. 

The index for all items less food and energy rose 0.1 percent in August, the
smallest monthly increase since April. Along with the shelter index, the indexes
for airline fares and used cars and trucks were among those that increased in
August.  An array of indexes declined, including apparel, medical care,
communication,recreation, and personal care. 

The all items index rose 2.7 percent for the 12 months ending August, a smaller
increase than the 2.9 percent increase for the 12 months ending July. The index
for all items less food and energy rose 2.2 percent for the 12 months ending
August and the energy index increased 10.2 percent; these were both smaller
increases than for the 12 months ending July. The food index increased 1.4 percent
over the last 12 months, the same increase as for the period ending July.   

Table A. Percent changes in CPI for All Urban Consumers (CPI-U): U.S. city
average
                                                                               
                                                                               
                                  Seasonally adjusted changes from             
                                          preceding month                      
                                                                          Un-  
                                                                       adjusted
                                                                        12-mos.
                              Feb.  Mar.  Apr.  May   June  July  Aug.   ended 
                              2018  2018  2018  2018  2018  2018  2018   Aug.  
                                                                         2018  
                                                                               
                                                                               
 All items..................    .2   -.1    .2    .2    .1    .2    .2      2.7
  Food......................    .0    .1    .3    .0    .2    .1    .1      1.4
   Food at home.............   -.2    .1    .3   -.2    .2    .2    .0       .5
   Food away from home (1)..    .2    .1    .2    .3    .2    .1    .2      2.6
  Energy....................    .1  -2.8   1.4    .9   -.3   -.5   1.9     10.2
   Energy commodities.......   -.9  -4.7   3.0   1.6    .6   -.6   3.0     20.4
    Gasoline (all types)....   -.9  -4.9   3.0   1.7    .5   -.6   3.0     20.3
    Fuel oil................  -3.6   -.7   2.7   -.7   2.9   1.2   2.2     30.9
   Energy services..........   1.4   -.2   -.5   -.1  -1.5   -.4    .4      -.4
    Electricity.............    .4    .0   -.6    .1  -1.4   -.4    .3      -.5
    Utility (piped) gas                                                        
       service..............   4.7  -1.2   -.4   -.6  -1.7   -.5    .9       .1
  All items less food and                                                      
     energy.................    .2    .2    .1    .2    .2    .2    .1      2.2
   Commodities less food and                                                   
      energy commodities....    .1   -.1   -.1   -.1    .0    .1   -.3      -.2
    New vehicles............   -.5    .0   -.5    .3    .4    .3    .0       .3
    Used cars and trucks....   -.3   -.3  -1.6   -.9    .7   1.3    .4      1.3
    Apparel.................   1.5   -.6    .3    .0   -.9   -.3  -1.6     -1.4
    Medical care commodities   -.3    .1   -.2   1.3    .2  -1.1   -.3       .3
   Services less energy                                                        
      services..............    .2    .3    .2    .3    .2    .3    .2      3.0
    Shelter.................    .2    .4    .3    .3    .1    .3    .3      3.4
    Transportation services    1.0    .2   -.4    .0    .2    .5    .3      3.9
    Medical care services...    .0    .5    .2   -.1    .5    .1   -.2      1.9

   1 Not seasonally adjusted.



Food

The food index rose 0.1 percent in August as the index for food away from home rose
0.2 percent and the food at home index was unchanged. The major grocery store food
groups generally posted small changes in August. The fruits and vegetables index was
the only one to decline, falling 0.3 percent as the index for fresh fruits declined
1.4 percent. 

The index for nonalcoholic beverages rose 0.2 percent, and the index for meats,
poultry, fish, and eggs increased 0.1 percent, as did the index for dairy and
related products. The indexes for cereals and bakery products and for other food at
home were both unchanged in August.   

The food at home index increased 0.5 percent over the past year. The index for meats,
poultry, fish, and eggs rose 1.1 percent over the span; the remaining major grocery
store food group indexes posted smaller increases, except for the dairy index, which
was unchanged over the last 12 months. The index for food away from home rose
2.6 percent over the last year. 

Energy

The energy index rose 1.9 percent in August after declining in June and July. The
gasoline index rose 3.0 percent in August after declining 0.6 percent in July.
(Before seasonal adjustment, gasoline prices decreased 0.3 percent in August.) The
index for electricity rose 0.3 percent in August after falling in June and July. The
index for natural gas also turned up in August, rising 0.9 percent after falling in
each of the 5 prior months.    

The energy index increased 10.2 percent over the past year. The indexes for gasoline
and fuel oil rose sharply, increasing 20.3 percent and 30.9 percent, respectively.
The index for natural gas rose slightly over the past 12 months, increasing
0.1 percent, while the electricity index declined 0.5 percent.  

All items less food and energy

The index for all items less food and energy increased 0.1 percent in August. The
shelter index rose 0.3 percent in August, the same increase as in July. The rent
index rose 0.4 percent and the index for owners' equivalent rent advanced 0.3 percent. 

The index for airline fares increased 2.4 percent in August following a 2.7-percent
increase in July. The index for used cars and trucks also continued to rise, advancing
0.4 percent in August after a 1.3-percent increase in July. The index for education
also increased in August.  

The apparel index declined in August, falling 1.6 percent, its third consecutive
decline. The medical care index declined in August, falling 0.2 percent, the same
decrease as in July. The indexes for physicians' services and hospital services both
declined 0.1 percent, while the index for prescription drugs was unchanged. The index
for communication fell 0.2 percent in August, and the indexes for recreation and for
personal care both fell 0.1 percent. The indexes for new vehicles and for household
furnishings and operations were both unchanged in August.   

The index for all items less food and energy rose 2.2 percent over the past 12 months.
The shelter index increased 3.4 percent over the last 12 months, and the medical care
index rose 1.5 percent. The index for new vehicles rose 0.3 percent over the span,
while the indexes for apparel and for airline fares both declined over the past 12 months.

Not seasonally adjusted CPI measures

The Consumer Price Index for All Urban Consumers (CPI-U) increased 2.7 percent over the
last 12 months to an index level of 252.146 (1982-84=100). For the month, the index
increased 0.1 percent prior to seasonal adjustment.  

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased
2.9 percent over the last 12 months to an index level of 246.336 (1982-84=100). For the
month, the index increased 0.1 percent prior to seasonal adjustment.  

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) increased 2.5 percent
over the last 12 months. For the month, the index was unchanged on a not seasonally
adjusted basis. Please note that the indexes for the past 10 to 12 months are subject
to revision. 


	

The Consumer Price Index for September 2018 is scheduled to be released on
Thursday, October 11, 2018, at 8:30 a.m. (EDT).








Technical Note 

Brief Explanation of the CPI

The Consumer Price Index (CPI) measures the change in prices paid by consumers
for goods and services. The CPI reflects spending patterns for each of two
population groups: all urban consumers and urban wage earners and clerical
workers. The all urban consumer group represents about 93 percent of the total
U.S. population. It is based on the expenditures of almost all residents of
urban or metropolitan areas, including professionals, the self-employed, the
poor, the unemployed, and retired people, as well as urban wage earners and
clerical workers. Not included in the CPI are the spending patterns of people
living in rural nonmetropolitan areas, farming families, people in the Armed
Forces, and those in institutions, such as prisons and mental hospitals.
Consumer inflation for all urban consumers is measured by two indexes, namely,
the Consumer Price Index for All Urban Consumers (CPI-U) and the Chained
Consumer Price Index for All Urban Consumers (C-CPI-U).

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)
is based on the expenditures of households included in the CPI-U definition
that meet two requirements: more than one-half of the household's income must
come from clerical or wage occupations, and at least one of the household's
earners must have been employed for at least 37 weeks during the previous
12 months. The CPI-W population represents about 29 percent of the total U.S.
population and is a subset of the CPI-U population.

The CPIs are based on prices of food, clothing, shelter, fuels, transportation,
doctors’ and dentists’ services, drugs, and other goods and services that
people buy for day-to-day living. Prices are collected each month in 75 urban
areas across the country from about 5,000 housing units and approximately
22,000 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 75 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 by the Bureau’s trained representatives.

In calculating the index, price changes for the various items in each location
are aggregated using 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 23 selected 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. The CPI-U and CPI-W are
considered final when released, but the C-CPI-U is issued in preliminary form
and subject to three subsequent quarterly revisions.

The index measures price change from a designed reference date. For most of the
CPI-U and the CPI-W, the reference base is 1982-84 equals 100. The reference
base for the C-CPI-U is December 1999 equals 100.  An increase of 7 percent from
the reference base, for example, is shown as 107.000. Alternatively, that
relationship can also be expressed as the price of a base period market basket
of goods and services rising from $100 to $107.

Sampling Error in the CPI

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 0.03 percent for the U.S. all items CPI. 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 percent
of these estimates will be within 0.06 percent of the 1-month percentage
change based on all retail prices. For example, for a 1-month change of
0.2 percent in the all items CPI-U, we are 95 percent confident that the actual
percent change based on all retail prices would fall between 0.14 and
0.26 percent. For the latest data, including information on how to use the
estimates of standard error,
see https://www.bls.gov/cpi/tables/variance-estimates/home.htm.

Calculating Index Changes

Movements of the indexes from 1 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 following
table shows an example of using index values to calculate percent changes:
 
                                 Item A                   Item B                    Item C
Year I                          112.500                  225.000                   110.000
Year II                         121.500                  243.000                   128.000
Change in index points            9.000                   18.000                    18.000
Percent change 9.0/112.500 x 100 = 8.0  18.0/225.000 x 100 = 8.0 18.0/110.000 x 100 = 16.4

Use of Seasonally Adjusted and Unadjusted Data

The Consumer Price Index (CPI) produces both unadjusted and seasonally adjusted data.
Seasonally adjusted data are computed using seasonal factors derived by the X-13ARIMA-SEATS
seasonal adjustment method. These factors are updated each February, and the new factors are
used to revise the previous 5 years of seasonally adjusted data. For more information on data
revision scheduling, please see the Factsheet on Seasonal Adjustment
at www.bls.gov/cpi/seasonal-adjustment/questions-and-answers.htm
and the Timeline of Seasonal Adjustment Methodological Changes
at www.bls.gov/cpi/seasonal-adjustment/timeline-seasonal-adjustment-methodology-changes.htm.

For analyzing short-term 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 weather events,
production cycles, model changeovers, holidays, and sales. This allows data users to focus on
changes that are not typical for the time of year. The unadjusted data are of primary interest
to consumers concerned about the prices they actually pay. Unadjusted data are also 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. BLS advises against the use of seasonally adjusted data in escalation
agreements because seasonally adjusted series are revised annually.

Intervention Analysis

The Bureau of Labor Statistics uses intervention analysis seasonal adjustment for some CPI series.
Sometimes extreme values or sharp movements can distort the underlying seasonal pattern of price
change. Intervention analysis seasonal adjustment is a process by which the distortions caused by
such unusual events are estimated and removed from the data prior to calculation of seasonal
factors. The resulting seasonal factors, which more accurately represent the seasonal pattern, are
then applied to the unadjusted data.

For example, this procedure was used for the motor fuel series to offset the effects of the 2009
return to normal pricing after the worldwide economic downturn in 2008. Retaining this outlier
data during seasonal factor calculation would distort the computation of the seasonal portion of
the time series data for motor fuel, so it was estimated and removed from the data prior to
seasonal adjustment. Following that, seasonal factors were calculated based on this “prior adjusted”
data. These seasonal factors represent a clearer picture of the seasonal pattern in the data. The
last step is for motor fuel seasonal factors to be applied to the unadjusted data.

For the seasonal factors introduced in January 2018, BLS adjusted 38 series using intervention
analysis seasonal adjustment, including selected food and beverage items, motor fuels, and
natural gas.

Revision of Seasonally Adjusted Indexes

Seasonally adjusted data, including the U.S. city average all items index levels, are subject to
revision for up to 5 years after their original release. Every year, economists in the CPI
calculate new seasonal factors for seasonally adjusted series and apply them to the last 5 years
of data. Seasonally adjusted indexes beyond the last 5 years of data are considered to be final
and not subject to revision. In January 2018, revised seasonal factors and seasonally adjusted
indexes for 2013 to 2017 were calculated and published. For series which are directly adjusted
using the Census X-13ARIMA-SEATS seasonal adjustment software, the seasonal factors for 2017
will be applied to data for 2018 to produce the seasonally adjusted 2018 indexes. Series which
are indirectly seasonally adjusted by summing seasonally adjusted component series have seasonal
factors which are derived and are therefore not available in advance.

Determining Seasonal Status

Each year the seasonal status of every series is reevaluated based upon certain statistical
criteria. Using these criteria, BLS economists determine whether a series should change its
status from "not seasonally adjusted" to "seasonally adjusted", or vice versa. If any of the
81 components of the U.S. city average all items index 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 before that period will not be changed. Twenty-nine of the 81 components of the
U.S. city average all items index are not seasonally adjusted for 2018.

Contact Information

For additional information about the CPI visit www.bls.gov/cpi or contact the CPI Information
and Analysis Section at 202-691-7000 or cpi_info@bls.gov.

For additional information on seasonal adjustment in the CPI visit
https://www.bls.gov/cpi/seasonal-adjustment/home.htm or contact the CPI seasonal adjustment
section at 202-691-6968 or cpiseas@bls.gov.

Information from this release will be made available to sensory impaired individuals upon request.
Voice phone: 202-691-5200; Federal Relay Service: 1-800-877-8339.