June CPI Fell One-Tenth of a Percent
What exactly does this mean? The Consumer Price Index measures the average change in prices over time of goods and services that are purchased by households.
According to the U.S. Bureau of Labor Statistics, “CPIs are based on the prices of food, clothing, shelter, fuel, transportation fares, charges for doctors and dentists, drugs and other items and services people buy for daily living. Prices are gathered from 87 urban areas across the country, 4,000 housing units and approximately 25,000 retail establishments. In calculating the index items are weighted according to importance in the spending.”
The fall in energy prices (-2.9%), in particular gasoline prices (-4.5%) was responsible for the overall CPI decline. Food prices were unchanged.
Now if you take out food and energy (who need those things, right?) core prices rose by .2%. The rising price indexes included shelter, clothing, used cars, medical care, tobacco and recreation.
This was the third month in a row with a declining CPI, which hasn’t happened since the quarter running from October to December of 2008.
Consumers are being cautious with their spending because the job market is stagnant, credit is tight, home values are still falling and foreclosures are on the rise.The economy hasn’t quite made it to the recovery stage.
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