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The Consumer Price Index (CPI) decreased by 2.1 percent in July from its level a year ago, according to data released last week by the U.S. Bureau of Labor Statistics. This was the largest year-over-year decrease since 1950. This "deflation" is largely due to energy prices, which have fallen 28 percent from the extraordinary peak they reached one year ago, in July 2008.
Over the longer term, however, consumer prices have increased. Even after taking into account the past year’s deflation, the CPI today is still 29.2 percent higher than it was ten years ago. This means that it now takes $1.29 to buy what a dollar bought in July 1999. The chart and table below show longer-term trends in the overall CPI and major categories of goods and services.
Source: U.S. Bureau of Labor Statistics. Click to Enlarge. Percent Change in Selected Components of the CPI
(not seasonally adjusted) |
| 12 months
ended
July 2009 | 10 years
ended
July 2009 | | All Items | -2.1 | 29.2 | | Food and Beverages | 1.1 | 32.5 | | Housing | -.07 | 32.4 | | Apparel | 1.1 | -9.2 | | Transportation | -14.1 | 26.3 | | Medical Care | 3.2 | 49.6
| | Recreation | 1.2 | 12.2 | | Education & Communication | 2.8 | 26.4 | | Other Goods and Services | 7.5 | 44.4 | | Special Indexes: | | | | Energy | -28.1 | 85.8 | | Food | 0.9 | 32.6 | | All Items less Food and Energy | 1.5 | 24.0 |
Further Reading: The AIER Cost-of-Living Guide reviews trends in price inflation back to 1800, with a particular emphasis on changes since the 1970s. It includes a table that shows you how to convert prices from any year since 1920 to the present day. The 2009 Cost-of-Living Guide is available free to AIER subscribers or $2 for non-members. The April 6, 2009 issue of Research Reports includes a detailed table showing how much the CPI and dozens of the goods and services included in it changed, in percentage terms, in 2008. The biggest drop: gasoline prices, down 43 percent. The biggest increase: potatoes, up 22 percent. This Research Reports issue is available free to AIER subscribers or $2 for non-members. Use AIER’s Online Cost of Living Calculator to see how much the general price level has increased since any year going back to 1913.
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