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May 1991, Vol. 114, No. 5
Jesse G. Thomas
T he Consumer Price Index for All Urban Consumers (CPI-U) rose 6.1 percent in 1990. This figure compares with increases of 4.6 percent in 1989 and 4.4 percent in 1987 and 1988. It was the largest annual change since an 8.9-percent rise in 1981.
While the rise in the CPI-U in 1990 reflects, in large part, the dramatic surge in prices of energy commodities, up 35.4 percent, the rate of inflation excluding the volatile food and energy components also accelerated. The index for all items less food and energy rose 5.2 percent in 1990, following an increase of 4.4 percent in 1989. The 1990 rise reflects larger increases in prices of apparel commodities, up 5.0 percent in 1990 compared to an increase of 0.7 percent in 1989, and larger increases in the cost of most services. Charges for other services rose 7.1 percent in 1990, the largest increase in 7 years. The rates of change for these groups during the past 10 years are shown in table 1.
The Consumer Price Index for all items less food and energy, also known as the underlying rate of inflation, rose at a seasonally adjusted annual rate of 5.7 percent in the first half of 1990, compared with an increase of 4.7 percent during the first half of 1989. The acceleration early in the year probably reflected upward price pressure from increasing labor costs. This index rose at a seasonally adjusted annual rate of 4.8 percent in the second half of the year, reflecting the 1990 recession and its declining labor cost pressures and sluggish demand. Throughout 1990, inflationary pressures from the cost of materials other than energy were less than in recent years.
This excerpt is from an article published in the May 1991 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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