The U.S. Bureau of Labor Statistics says inflation went up by 0.3% in June, solidifying market expectations that the Federal Reserve will raise interest rates this year. The BLS released its monthly Consumer Price Index report on Friday July 17th.
The CPI is calculated by tracking the prices of “basket” goods and comparing it to their prices in a base year. The BLS currently uses 1982-1984 as the base year, granting it a CPI score of 100.
To understand how it works, imagine a year when inflation was 19.2% higher relative to the base year. In our example, the CPI score would read as 119.2. One point equals one percent. (Source: U.S. Bureau of Labor Statistics, July 17, 2015.)
The CPI score was 202.416 for the month of June, up from 201.800 a month before. Food and energy costs were on the rise, driven largely by an increase in eggs prices. The eggs index rose 18.3% in June alone. Gasoline was 3.4% more expensive than in May.
Despite the variety of economic and social circumstances, the CPI’s basket of goods aims to capture the buying preferences of average Americans. It measures the cost of food, energy, cars, clothing, real estate, and others.
Consumers benefitted from a slight reduction in the cost of clothes and cars. Even medical services were slightly less expensive than in May.