Consumer Prices

Highlights for August 2002

• Consumer prices rose slightly in August, but at a rate still indicative of low inflation. For the three months ended in August, prices rose at an annual rate of 2.3%.

• Energy price increases were moderate, but still increased at over twice the rate of overall prices. Energy prices in August were 2.8% lower than in August 2001.

• Forecasters are increasing their predictions for inflation covering the remainder of 2002 and 2003. The potential for military action in the Middle East increases the risk of an oil shock and with it higher consumer prices.

Year-over-year percent change in
Consumer Price Index (CPI-W)

CPI-W Index Value

	Base
	1967=100	1982-84=100
August 2002	526.0	176.6
July 2002	524.5	176.1
June 2002	524.0	175.9
Source: Bureau of Labor Statistics.

Consensus Inflation Forecast
August 2002

	Average annual rate	Implies CPI-W in last quarter of year will average...
		1967=100	1982-84=100
2002	1.7%	529.3	177.7
2003	2.5%	542.5	182.1
The Consensus Forecast is based on a survey of prominent economic and financial forecasters. The forecast covers the CPI for all urban consumers (CPI-U), rather than the CPI-W used in UAW COLA clauses. However, changes in the CPI-U and CPI-W track one another closely.