Rising prices for gasoline contributed to a 0.2 percent increase in the Consumer Price Index in January, according to figures released by the Bureau of Labor Statistics. The increase brings the index to 177.1 (1982-84=100), after decreases in October, November, and December, BLS said (Daily Labor Report, page D-1).
The inflation-adjusted earnings of U.S. workers declined by 0.5 percent on a seasonally adjusted basis in January, according to the Bureau of Labor Statistics. Real pay often declines during a recession as employers reduce hours and weaker demand for workers holds down wage increases. Since the recession began in March 2001, real weekly earnings have risen by a modest 1.4 percent. Without adjustment for inflation, weekly pay is up 2.1 percent since last March (Daily Labor Report, page D-19). Data from newly negotiated contract agreements, compiled by BNA through Feb. 18, show that the average first-year wage increase was 3.7 percent, the same as that in the comparable period of 2001. The median first-year increase for the same settlements was 3.5 percent. Among nonmanufacturing (excluding construction) settlements, the average increase was 4.2 percent, while manufacturing contracts posted an average increase of 2.3 percent (Daily Labor Report, page D-24). Negotiated wage and benefit increases in the construction industry are expected to come in "at close to the 4 percent average rate for all contracts last year, according to the Construction Labor Research Council's bargaining outlook (Daily Labor Report, page A-2). The Labor Department will publish a new consumer price index beginning this summer to address some longstanding concerns that the current index overstates inflation. The new measure, called a "superlative" or "chained" consumer price index, is meant to better capture how consumers tend to shift purchases to products whose prices are falling in relative terms. It will supplement, but not replace, the current CPI, the most widely used measure of how a household's cost of living changes over time, the Labor Department said yesterday. Bureau of Labor Statistics research suggests annual inflation would be 0.1 to 0.2 percentage point lower measured with the new index. The new chained CPI will be published by BLS beginning with July's data in August (The Wall Street Journal, page A2). Higher prices for gasoline, medical care, and some food items contributed to a mild rise in consumer inflation in January, the government said yesterday. But prices for clothing, cars, lodging and computers all fell, providing shoppers with some bargains. The Consumer Price Index rose 0.2 percent last month, meeting expectations, after dipping 0.1 percent in December, the Labor Department reported. Excluding energy and food prices, which can swing widely, the "core" rate of inflation increased 0.2 percent in January, up slightly from a 0.1 percent advance the month before (The New York Times, page C12). With energy costs declining sharply, consumer prices rose only 1.1 percent over the 12 months ended in January, the smallest increase since 1986, the Labor Department reported yesterday (The Washington Post, page E3). Many economists are raising their near-term forecasts for U.S. growth, citing the resiliency of consumer spending (The Wall Street Journal, page A2). One of the missing ingredients for a solid U.S. economic recovery this year--business spending on new plants, equipment and software--may be about to fall into place. The National Association of Manufacturers said yesterday that a survey of its members found that they plan to increase their capital spending throughout 2002, after a year of significant declines (The Washington Post, page E3). DUE OUT TOMORROW: State and Regional Unemployment, 2001 Annual Averages
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