The Bureau of Labor Statistics released the August 2014 CPI figures today. The ten-year look is on the Blogspot site. What I want to look today is the weightings used in the index. All weightings are set after the December numbers come in, but this will provide a small measure of expectations for changes.
The weighting on Food has been trending down. That isn’t a surprise since the CPI from August 2012 to August 2013 was below the average. For the period of August 2013 to August 2014, the CPI for Food is 2.70%. That is above the average of 1.70% and significantly above the previous year’s figure of 1.39%. The weighting for Food looks to be increasing.
Unsurprisingly, the weighting for Housing has been increasing. The CPI for the period of August 2012 through August 2013 was 2.17%, above the average level. For the period of August 2013 to August 2014, the CPI for Housing was 2.63%, like Food it is above the average and above the previous period’s rate. Even though, the weighting on Housing has been increasing, it looks like that trend will continue.
The weighting on Transportation has been decreasing. With a CPI for the period of August 2012 through August 2013 of 0.05%, that might not be a surprise. For the period of August 2013 through August 2014, the CPI for Transportation is -0.43%, which does seem like a surprise. Transportation looks like it will continue to see a reduction in weighting.
Okay, those are the big three because they add up to almost 73% of the total weight. There are two more areas of interest, though.
The weighting on Medical Care has been increasing. The CPI for Medical Care for the period of August 2012 through August 2013 was 2.34%, well above the average. This area becomes interesting when the CPI for the August 2013 through August 2014 period comes in at 2.09%. While this is still above the average, it is below the previous year’s rate. This part of the CPI will be interesting to watch during the balance of the year since the weighting might remain nearly the same due to the decreasing trend. That could cause some controversy since the rate is still above average.
Education & Communication
The trend for Education and Communication has been up. Given stories of the cost of Education, that isn’t a surprise. For the period of August 2012 through August 2013, the CPI was 1.55%, just slightly above average. For the period of August 2013 through August 2014, the CPI is 1.48%. Not only is that below the previous year’s rate, it is also below the average. If that continues for the remainder of the year, I would expect the weighting to decrease from it’s current amount of 7.087. That might also cause some controversy.
I have wondered why Education and Communication have been grouped together. Perhaps they were just pulled out of Other. Unfortunately, for the past decade those two components have been moving in opposite directions with Education rising and Communication falling. To be clear, Communication has seen a significant amount of deflation. Placing these two items together causes the increase in Education to be muted and difficult to compute.
Still, I have the data:
|Sub-Category||August 2013 to 2014|
|Books and Supplies||5.18%|