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April 2004, Vol. 127, No. 4

Consumer prices during 2003

Todd Wilson

The Consumer Price Index for All Urban Consumers (CPI-U) for All Items for the U.S. city average increased 1.9 percent in 2003, down from a 2.4-percent rise during the prior year, according to data from the Bureau of Labor Statistics.¹ Either lower price increases or larger price decreases were reported for a wide range of expenditure categories for both commodities and services. The 2003 deceleration in the all items index largely reflects lower price increases for shelter, gasoline, and medical care (including hospital services, physicians’ services, and prescription drugs). Additionally, durables prices decreased more in 2003 than in 2002. Telephone services prices also decreased sharply in 2003, after increasing very slightly in 2002.

Excluding both food and energy, the commodities index decreased 2.5 percent last year, after decreasing 1.5 percent in 2002, the largest calendar-year decrease since the BLS began keeping records in 1958. Durable commodities prices (including vehicles, furniture and bedding, computers, and so forth) decreased 4.3 percent in 2003, following a 3.3-percent decline in 2002, the largest calendar-year decrease since 1938. The nondurables index rose 2.4 percent last year, following a 3.1-percent increase during the earlier year. The aggregate commodities index rose 0.5 percent, following a 1.2-percent increase in 2002. Commodities are generally subject to greater global competition than services, and generally increase in price less than services. Services prices rose less in 2003 than in 2002 (2.8 percent versus 3.2 percent, respectively), reflecting lower increases for owners’ equivalent rent, rent of primary residence, and medical care services, and a decrease in telephone services. Service inflation has been decelerating for each of the past 3 years.

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Footnotes
1 Annual percent changes are calculated from December to December, unless otherwise stated.

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