August 2022 Consumer Price Index Summary

Consumer Price Index Summary

Transmission of material in this release is embargoed until

8:30 a.m. (ET) Tuesday, September 13, 2022 USDL-22-1834

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CONSUMER PRICE INDEX - AUGUST 2022

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in August on a

seasonally adjusted basis after being unchanged in July, the U.S. Bureau of Labor

Statistics reported today. Over the last 12 months, the all items index increased 8.3

percent before seasonal adjustment.

Increases in the shelter, food, and medical care indexes were the largest of many

contributors to the broad-based monthly all items increase. These increases were mostly

offset by a 10.6-percent decline in the gasoline index. The food index continued to rise,

increasing 0.8 percent over the month as the food at home index rose 0.7 percent. The

energy index fell 5.0 percent over the month as the gasoline index declined, but the

electricity and natural gas indexes increased.

The index for all items less food and energy rose 0.6 percent in August, a larger

increase than in July. The indexes for shelter, medical care, household furnishings and

operations, new vehicles, motor vehicle insurance, and education were among those that

increased over the month. There were some indexes that declined in August, including those

for airline fares, communication, and used cars and trucks.

The all items index increased 8.3 percent for the 12 months ending August, a smaller

figure than the 8.5-percent increase for the period ending July. The all items less food

and energy index rose 6.3 percent over the last 12 months. The energy index increased 23.8

percent for the 12 months ending August, a smaller increase than the 32.9-percent increase

for the period ending July. The food index increased 11.4 percent over the last year, the

largest 12-month increase since the period ending May 1979.

Food

The food index increased 0.8 percent in August, the smallest monthly increase in that

index since December 2021. The food at home index rose 0.7 percent in August as all six

major grocery store food group indexes increased. The index for other food at home rose

1.1 percent, while the index for cereals and bakery products rose 1.2 percent over the

month. The meats, poultry, fish, and eggs index; the fruits and vegetables index; and the

nonalcoholic beverages index all increased 0.5 percent in August. The index for dairy and

related products increased 0.3 percent over the month, the smallest increase in that index

since November 2021.

The food away from home index rose 0.9 percent in August after rising 0.7 percent in July.

The index for full service meals increased 0.8 percent and the index for limited service

meals increased 0.7 percent over the month.

The food at home index rose 13.5 percent over the last 12 months, the largest 12-month

increase since the period ending March 1979. The index for other food at home rose 16.7

percent and the index for cereals and bakery products increased 16.4 percent over the

year. The remaining major grocery store food groups posted increases ranging from 9.4

percent (fruits and vegetables) to 16.2 percent (dairy and related products).

The index for food away from home rose 8.0 percent over the last year. The index for full

service meals rose 9.0 percent over the last 12 months, and the index for limited service

meals rose 7.2 percent over the last year.

Energy

The energy index fell 5.0 percent in August after declining 4.6 percent in July. The

gasoline index fell 10.6 percent over the month following a 7.7-percent decrease in July.

(Before seasonal adjustment, gasoline prices fell 12.2 percent in August.) However, the

electricity index increased in August, rising 1.5 percent, its fourth consecutive monthly

increase of at least 1.3 percent. The index for natural gas also increased over the month,

rising 3.5 percent after declining 3.6 percent in July.

The energy index rose 23.8 percent over the past 12 months. The gasoline index increased

25.6 percent over the span and the fuel oil index rose 68.8 percent. The index for

electricity rose 15.8 percent, the largest 12-month increase since the period ending

August 1981. The index for natural gas increased 33.0 percent over the last 12 months.

All items less food and energy

The index for all items less food and energy rose 0.6 percent in August after increasing

0.3 percent in July. The shelter index continued to rise, increasing 0.7 percent in

August compared to 0.5 percent in July. The rent index rose 0.7 percent in August as did

the owners' equivalent rent index. The index for lodging away from home rose 0.1 percent

over the month after declining in June and July.

The medical care index rose 0.7 percent in August after rising 0.4 percent in July as

major medical care component indexes continued to increase. The index for hospital

services increased 0.7 percent over the month, while the index for prescription drugs

increased 0.4 percent. The index for physicians' services rose 0.2 percent in August.

The index for household furnishings and operations continued to rise, increasing 1.0

percent in August after rising 0.6 percent in July. The new vehicles index increased 0.8

percent over the month, and the motor vehicle insurance index rose 1.3 percent in August.

Other indexes that increased in August include personal care (+0.6 percent), education

(+0.5 percent), recreation (+0.2 percent), and apparel (+0.2 percent).

The index for airline fares continued to decline in August, decreasing 4.6 percent after

falling 7.8 percent in July. The communication index fell 0.2 percent in August following

a 0.4-percent decline in July. The index for used cars and trucks also declined over the

month, falling 0.1 percent.

The index for all items less food and energy rose 6.3 percent over the past 12 months, a

larger increase than the 5.9-percent increase for the 12 months ending in July. The

shelter index rose 6.2 percent over the last year, accounting for about 40 percent of the

total increase in all items less food and energy. Other indexes with notable increases

over the last year include household furnishings and operations (+9.9 percent), medical

care (+5.4 percent), new vehicles (+10.1 percent), and used cars and trucks (+7.8 percent).

Not seasonally adjusted CPI measures

The Consumer Price Index for All Urban Consumers (CPI-U) increased 8.3 percent over the

last 12 months to an index level of 296.171 (1982-84=100). For the month, the index was

unchanged prior to seasonal adjustment.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 8.7

percent over the last 12 months to an index level of 291.629 (1982-84=100). For the month,

the index declined 0.2 percent prior to seasonal adjustment.

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) increased 8.0 percent

over the last 12 months. For the month, the index increased 0.1 percent 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 2022 is scheduled to be released on Thursday,

October 13, 2022, at 8:30 a.m. (ET).

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January 2023 Consumer Price Index Weight Update

Starting with January 2023 data, BLS plans to update weights annually for the Consumer

Price Index based on a single calendar year of data, using consumer expenditure data from

2021. This reflects a change from prior practice of updating weights biennially using two

years of expenditure data.

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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

6,000 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 visit, telephone call, or web collection 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 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. The factors are available

at www.bls.gov/cpi/tables/seasonal-adjustment/seasonal-factors-2022.xlsx. 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 (IASA) 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 for January 2022, BLS adjusted 72 series using intervention

analysis seasonal adjustment, including selected food and beverage items, motor fuels, electricity,

and vehicles.

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. For January 2022, revised seasonal factors and seasonally adjusted

indexes for 2017 to 2021 were calculated and published. For series which are directly adjusted

using the Census X-13ARIMA-SEATS seasonal adjustment software, the seasonal factors for 2021 will

be applied to data for 2022 to produce the seasonally adjusted 2022 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. For 2022, 22 of the 81 components of the U.S. city

average all items index are seasonally adjusted.

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

www.bls.gov/cpi/seasonal-adjustment/home.htm or contact the CPI seasonal adjustment section at

202-691-6968 or cpiseas@bls.gov.

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