bls_1165_1954.pdf

C o n s u m e r P r i c e s

in the United States1 9 4 9 - 5 2

PRICE TRENDS AND INDEXES

Bulletin No. 1165

U N I T E D S T A T E S D E P A R T M E N T O F L A B O R

J a m e s P . M i t c h e l l , S e c r e t a r y

B U R E A U O F L A B O R S T A T I S T I C S

E w a n C l a g i f e , C o m m i s s i o n r

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

C O N SU M E R P R IC E S in the U n ited S ta te s ,1 9 4 9 - 5 2

Price Trends and Indexes

B u l l e t i n N o . 1 1 6 5

UNITED STATES DEPARTMENT O F LA BOR

Ja m e s P. M itch e ll, S e c r e ta r y

BUREAU OF LABOR STATISTICS Ewan Clogun, Commissions

F o r sale by th e Superintendent o f Documents, U . S . Government P rin tin g Office, . W ashington 25, D. C. P rice 45 centsDigitized for FRASER

http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

UNITED STA TE S D E P A R T M E N T O F L A B O R ,Bureau of Labor S tatistics,

W ashington , D. C . , June 15 ; 1954*

The S E C R E T A R Y O F LA B O R :

I have the honor to tra n sm it herew ith a bu lletin su m m a riz in g data on co n su m e r p r ic e s fo r the y e a rs 1949 through 1952* M ost o f this in form a tion has been r e le a s e d in m im eogra p h ed m onthly re p o rts fu rn ish in g cu rre n t fig u re s on the B u rea u s C on su m er P r ic e Index fo r c ity w a g e -e a r n e r and c le r ic a l -w o r k e r fa m ilie s . This re p o rt con tinues an h is to r ic a l r e c o r d o f in form a tion on this su b ject p ro v id ed in p re v io u s p u b lica tion s .

The bu lletin was p re p a re d by m e m b e rs o f the sta ff o f the B u rea u s D iv is ion o f P r ic e s and C ost o f L iv in g , under the d ir e c tion o f A bn er H urw itz, C h ie f, C ost o f L iv ing B ran ch . P lanning and co o rd in a tion o f the m a te r ia ls included w as the r e sp o n s ib ility o f D o r is P . R othw ell o f the C ost o f L iv ing B ran ch .

EW AN C L A G U E , C o m m is s io n e r .

Hon. JAM ES P . M IT C H E L L ,S e cre ta ry o f L a b or .


" P r e fa c e

This bulletin, Consum er P rices in the United States, 1 9 4 9 -5 2 , presents a brief analysis of the trend of retail prices and sum m ary tabulations of index numbers based on p rices collected for the Bureau of Labor S tatistics1 Consum er P rice Index for the 4 -y e a r period 1949 -52 . With this publication, the historical records on this subject cover the period up to early 1953, the date of introduction of the latest com prehensive revision of the Consum er P rice Index. The present report, therefore, does not include index numbers for some groups and subgroups of goods and services for which figures are available after 1952. The latest prior publication of these historical records was in Bulletin No. 966, Consum ers 1 P rices in the United States, 1942 -48 .

The trend of consum er prices in the years 19 4 9 -5 2 , bears the impact of the Korean conflict on the Nation*s economy following a period of gradually em erging stability in 1949 and early 1950. The sharp upturn in prices that ensued, continued through the year 1951. P rices then leveled off and moved within a narrow range through 1952, and the relative stability that characterized that year p ersists to the present. The general trend of p rices indicated by the total Consum er P rice Index directly reflects the movement of comm odity p r ic e s --fo o d s , apparel, housefurnishings, e t c .,- -w h ic h represent the bulk of fam ily spending. However, prices of services -- .m e d ic a l and personal ca re , utilities, e t c . , - - continued their steady upward trend throughout the 1949-52 period, reflecting the increasing demand for services that accompanies im provem ents in the economic position of the Am erican w orker.

Following the outbreak of the Korean h ostilities, attention was focused on the Consum er P rice Index as an economic indicator, and increasing use of the index in wage determination was anticipated. Recognizing that a long range com prehensive program for the revision of the index, already indicated, would not provide urgently needed index adjustments in tim e for application to em ergency situations, the Bureau made an interim adjustment of the index in the fall of 195 0. Changes in index weights and in the list of item s priced w ere introduced into the index series as of January 195 0, and a correction of the rent index was made retroactive to 1940. The discussion of price change in this report is based on movements of this "ad ju sted " index ser ie s .

The tabular sum m ary of index numbers for the years 1 94 9 -52 includes indexes based on the unadjusted procedure (the "o ld s e r ie s ") through June 1953. This series was discontinued after that date.

m


P A G EA n a ly s is o f p r ic e tren ds . . . . . . . .......... ............................................................ . 1

B a ck grou n d , 1942-48 ..................................................................................... 1Y ea r o f tra n s ition , 1948 . . . . . . . .......... ............................................. 1R eta il p r ic e m o v e m e n ts , 1949-52 .............................. 2

P r ic e d e c lin e , S eptem ber 1948 - F e b ru a ry 1950 .......... 2K orea n im p a ct, F e b ru a ry 1950 - D e ce m b e r 1951 .......... 3R ela tive s ta b ility , D e ce m b e r 1951 - D e ce m b e r 1952 .......... 4

C om m od ity groups ................................................................ ........................... 4F ood .......................................... ............................... ...................................... 6A p p a re l and tex tile h ou sefu rn ish in gs .......... .............. 9D urable good s ................................................................ ..................... .. 9F u e ls , g a s , and e l e c t r i c i t y .......... .................................... .. . 10M isce lla n e o u s s e r v i c e s ........................................................................ 11R e n t .................... ......................................................................................... .. 11

In te rc ity v a ria tion ............... .. . .................................. ................ 12

The C on su m er P r ic e Index ................................................................ 15D e s c r ip t io n ................. 15C o m p a r iso n o f the O ld , A d ju sted , and R e v ised S e r ie s 16The In terim A d ju stm ent .......... ............................................................ 16

New unit b ias a d ju s tm e n t ..................................................................... 16R e v is io n o f popu lation w eights .................... ................................. .. 19A dd ition o f new i t e m s ................... 19R e v is io n o f co m m o d ity w eights .......... ............ 20

C o m p a r iso n o f m ovem en ts o f the Old S e r ie s andA d ju sted S e r ie s ........................................................... .... . . 20

O ther changes in p r o c e d u r e s , 1949-52 ............... 21C om p reh en s iv e re v is io n o f the i n d e x ............... ................................. .. 22U ses o f the in d e x ............................................................. 24

W age a d ju s t m e n t ...................... 24O ther u s e s ..................................................................... ......................... 25C o n v e rs io n p ro b le m s o f index u s e r s .......................................... 25

TA B L E S

1 . - P e r c e n t Change in R eta il P r ic e s o f S e lected G rou ps o f G oodsand S e rv ice s fo r S e lected P e r io d s , 1948-52 2

2 . - P ercen t Change and Turning P o in ts in the T rend o f C on su m erP r i c e s , 1948-52 ...................... 5

3 . - P e r c e n t In cre a se in C on su m er P r ic e s fr o m S e lectedP re w a r D ates ............... ................ ................... 5

4 . - P e r c e n t Change in R eta il P r ic e s o f F o o d fo r S e lectedP e r io d s , 1948- 52 ....................................................................... 6

I V


T A B L E S - (co n t 'd . )PA G E

5. - A v era g e R eta il P r ic e s o f S e le cted F o o d s , D e ce m b e r 1948,D e ce m b e r 1950, and D e ce m b e r 1952 ............................................... 8

6. - P e rce n t Change in C on su m er P r ic e s B etw een L ast P r ic e dM onths o f 1948 and 1952 .......................................................................... 13

7. - C om p a rison o f O ld, A d ju sted , and R e v ise d C on su m er P r ic eIndex S e r i e s ..................................................................... ............................... 17

8. - C om p a rison o f P r ic e Changes b a sed on 'A d ju sted 11 and"O ld S e r ie s " C on su m er P r ic e In dexes, 1950-52 ..................... 21

TA B U L A R SUM M ARY

A . - C on su m er P r ic e Index: N ational A v e ra g e by C om m od ity G roupsA d ju sted S e r ies 194 0 -52 , Old S e r ie s 1940-June 1953 ............ 34

B . - C on su m er P r ic e Index: 34 L a rg e C ities by C om m od ity G roupsA d ju sted S e r ies 194 0 -52 , O ld S e r ie s 1940-June 1953 ............ 35

C. - C on su m er P r ic e Index: Indexes o f R eta il P r ic e s o f S p ecia lG rou ps o f G oods and S e r v i c e s .............................................................. 58

D. - C on su m er P r ic e Index: Indexes o f R eta il P r ic e s o f S e le ctedI t e m s ................................................................................................................... 59

CH ARTS

Chart A . - C on su m er P r ic e Index 193 5 -52 , C o m m o d it ie s , R en ts ,and S e r v i c e s ......................................................................................... v i

Chart B. - C on su m er P r ic e Index 193 9 -52 , M a jo r G rou ps o f G oodsand S e r v i c e s ......................................................................................... 7

A P PE N D IX E S

A . - P u b lica tion o f the C on su m er P r ic e I n d e x ................................................. 26

B. - R e la ted P ro g ra m s o f the B ureau o f L a b or S t a t i s t i c s ......................... 28

C. - R e la tive Im p ortan ce o f C om ponents in A d ju sted S e r ie s Index . . . 31

C on su m er P r ic e Index: L is t o f Item s Included and R e la tiv e Im p ortan ce o f E ach Item in M a jo r G rou ps o f Item s and in T ota l Index A fte r In terim A d ju stm en t, January 1950 and D e ce m b e r 1952 ......................................... 32

B ib l io g r a p h y ........................................................................................................................... 69

v


Chart ACONSUMER PRICE INDEX

Commodities, Rent, and Services

IN D E X 1935 - 52

UNITED STATES DEPARTMENT OF LABOR BUREAU OF LABOR STATISTICS ^ SE R V IC ES1 U tilities-, a u to r e p a ir s ; lic e n s e s ; in s u ra n c e ; p e r s o n a l , d o m e s t ic , la u n d ry c a re and se rv ice - ,

m e d ic a l s e r v ic e ; p ub lic t ra n sp o rta t io n - , m otion p ic tu re a d m is s io n s ; n e w s p a p e rs .

V I


C O N S U M E R PRICES IN THE U N I T E D S T A T E S , 1 9 4 9 - 5 2

f i n i t e ' J n e n e t e

B a c k g r o u n d , 1 9 4 2 - 4 8 1

T h e A m e r i c a n e c o n o m y at the end of 1948 s e e m e d to be recovering f r o m the w a r - i n d u c e d inflation that b e g a n in1942. D u r i n g this period, aggregate personal c o n s u m p t i o n expenditures r e a c h e d $ 1 7 8 billion, a n i n c r e a s e of 96 percent. H o w e v e r , although c o n s u m e r prices a d v a n c e d 47. 5 percent, personal c o n s u m p t i o n expenditures in constant dollars increased only 32 percent.

T h e entry of the United States into w a r in D e c e m b e r 1941 w a s followed b y a period of rapidly rising prices w h i c h continued to M a y 1942; h o w e v e r , prices rose at a m o r e gradual p a c e through M a y1943, as the G o v e r n m e n t ^ b r o a d p r o g r a m of e c o n o m i c stabilization took effect. M a y 1943 to June 1946 w a s a period of c o m p a r a t i v e orice stability u nder the effect of control m e a s u r e s a k e n in support of the P r e s i d e n t s "hold-the- linen order issued in April 1943. B e ginning in July 194&, controls w e r e rem o v e d rapidly a n d prices rose at the sharpest rate ever m e a s u r e d b y the C o n s u m e r Price Index. Although w a r time p r e s s u r e s a p p e a r e d to have slackened b y M a r c h 1947, prices continuedto increase u n d e r the influence of m o u n t i n g p o s t w a r d e m a n d s , rising costs a n d continuing shortages. T h e p e a k of the a d v a n c e w a s r e a c h e d in A u g u s t a n d S e p t e m b e r 1948 w h e n it a p p e a r e d that the m o s t urgent d e m a n d s w e r e being filled a n d supplies w e r e b e c o m i n g m o r e plentiful.

Y e a r of Transition, 1948

T h e yea r 1948 w a s m a r k e d by transition to a b u y e r s 1 m a r k e t , a n d the

1 See B u r e a u of L a b o r Statistics B u l letin No. 966, C o n s u m e r s * Prices in the United States 1942-48 .

en d of the w a r a n d r e conversion c o n dition of excess d e m a n d a n d rising prices. A t the beginning of the year inflationary p r e s s u r e s w e r e still strong, w a g e s w e r e rising, a n d disposable personal i n c o m e s w e r e high. But supplies of c o n s u m e r goods w e r e building up; anticipated b u m p e r agricultural crops w e r e realized, a n d pent-up d e m a n d w a s gradually satisfied. Thus, supply a n d d e m a n d w e r e brought into better balance. A n u m b e r of fiscal actions taken in S e p t e m b e r -- the r e imposition of regulations over installm e n t selling a n d the raising of re s e r v e r e q u i r e m e n t s of m e m b e r banks b y the Fe d e r a l R e s e r v e B o a r d -- tended to s t e m further inflation.

Until the third quarter of 1948, the p o s t w a r u p w a r d m o v e m e n t of prices at wholesale h a d not materially slackened. T h e effects of current increases in w a g e rates, freight charges., a n d in prices of industrial r a w materials w e r e still being carried through distributive channels. T h e r e w a s a definite w e a k ness in agricultural c o m m o d i t y prices, h o w e v e r , b e c a u s e of r e c o r d crops a n d slackening of export d e m a n d . A t r e tail, food prices b e g a n to b r e a k in the first quarter of 1948 but turned up again sharply until m i d - s u m m e r . F o o d prices declined substantially beginning in S e p t e m b e r , reflecting plentiful s u p plies of crops a n a livestock. B y D e c e m ber, food prices h a d fallen m o r e than 5 percent f r o m the July peak. Retail prices of c o m m o d i t i e s other than foods m o v e d over a n a r r o w e r range during the year. F e w e r price increases w e r e reported a n d d e c r e a s e s w e r e evident t o w a r d the end of the y e a r as c o n s u m e r resistance forced reductions in prices of apparel a n d housefurnishings items.


2 C O N S U M E R P R I C E S IN T H E U N I T E D S T A T E S

Retail Price M o v e m e n t s , 1949-52

T h e m o v e m e n t s of retail prices f r o m 1949 through 1952 m a y be grouped in three b r o a d periods (1) the period of the p o s t - W o r l d W a r II price recession (roughly S e p t e m b e r 1948 to F e b r u a r y 1950), (2) the period of price rises generated b y the K o r e a n hostilities (about F e b r u a r y 1950 to D e c e m b e r 1951), a n d (3) the period of relative price stability ( D e c e m b e r 1951 to D e c e m b e r 1952). Table 1 s h o w s changes in retail prices during these years.

T h e d o w n t u r n in prices w h i c h started in the fall of 1948, w a s already c o m i n g to a n end w h e n the K o r e a n h o s tilities b e g a n in June 1950. In the e n suing period, m o s t c o m m o d i t y prices rose to levels even higher than those of the previous p o s t - W o r l d W a r II p ea k s before reaching s o m e degr e e of stability at the end of 1951.

P r i m a r y m a r k e t (wholesale)prices d e c r e a s e d steadily for nearly a yea r f r o m their p o s t w a r p e a k in the fall of 1948 a n d r e m a i n e d generally stable Until m i d - 1950, w h e n they turned u p

w a r d abruptly, to r e a c h their all-time p e a k in early 1951. Both in the postw a r decline a n d subsequent rise, the m o v e m e n t s of a v e r a g e p r i m a r y m a r k e t prices led the a v e r a g e m o v e m e n t s in retail m a r k e t s . In part this represents the n o r m a l lag of retail prices a n d their greater rigidity, but in part it points up a significant factor in the story of retail prices of the period, n a m e l y , the contrasts in the behavior of c o m m o d i t y prices a n d services fees. T h e f o r m e r reacted in varying d e g r e e s to changing conditions; the latter r e m a i n ed relatively insensitive to short-run influences a n d continued to increase.

Price Decline, S e p t e m b e r 1948 - F e b r u a r y 1 9 5 0 . - Although retail prices generally r e a c h e d their p e a k in Septe m b e r 1948 a n d then declined, the turning points in trends of individual c o m m o d i t y prices w e r e b y no m e a n s identical. Prices of foods a n d s o m e other c o m m o d i t y g r o u p s b e g a n to d e cline even before the fall of 1948. In contrast, prices of services a n d rent continued to rise.

Table 1 Percent Change in Retail P r ices of Selected Groups of Goods and Services for Selected P e r io d s ,1948 - 52

Percent changeSept. 1948 Feb. 1950 Dec. 1951 Dec. 1948

Group to to to toFeb. 1950 Dec. 1951 Dec. 1952 Dec. 1952

A ll i t e m s .......................................................................................................... - 4 . 2 + 12. 6 +0. 8 + 10. 7

Com m odities ............................................................................................ I / - 7 - 3 2/4 14. 9 - 1 . 0 + 8 . 4Services ....................................................................................................... 1 /^4 . 6 2 / f 9. 0 4.9 + 18. 1Rent ....................................................................... .. ....................................... + 5. 8 4 7 .3 4 4 . 4 + 1 7 .2

Food ................................................................................................................. - 9 . 4 + 19. 1 - 1 . 0 + 12. 1Apparel .......................................................................................................... - 8 . 0 + 11. 8 - 2 . 8 + 0 .3Housefurnishings ..................................................................................... - 6 . 5 + 13. 5 - 2 . 3 + 3 . 4Solid fuels and fuel oil ....................................................................... + 0 . 8 + 7 .3 + 4. 8 + 13. 1Gas and electricity ............................................................................... 42. 5 + 0. 6 42. 1 + 4 . 5Transportation .......................................................................................... + 4. 5 + 11. 1 45. 5 + 2 1 .6M edical care ............................................................................................... + 2. 9 + 8 .9 4 4 . 4 + 15 .9Pe rsonal care ................ ......................................................................... - 2 . 8 + 12. 0 4 1 .3 + 9 .5Reading and recreation ..................................................................... + 3. 8 + 1 .8 + 1 .4 + 4 .9

J . / Percent change from September 1948 to M arch 1950 .T (Note: F ebruary 1950 figures not available2 j Percent change from M arch 1950 to D ecem ber 1951. J ^ for these special groupings.


A N A L Y S I S O F P R I C E T R E N D S 3

T h e en d of the w a r - i n d u c e d u p w a r d swing c a m e earliest for agricultural prices. Reductions in prices of r a w materials in p r i m a r y m a r k e t s followed, a n d gradually the effects s p r e a d through the distributive process. At the retail level the result w a s reflected in c o m m o d i t y prices, beginning with food in July 1948, a n d extending to apparel a n d other c o m m o d i t y gro u p s b y a u t u m n . B y the end of the year, slight d e c r e a s e s in retail prices of apparel a n d housefurnishings w e r e recorded. L o w e r costs of r a w cotton a n d c o n s u m e r r e sistance to high prices, w e r e i m p o r tant contributing factors.

Characteristically, rents a n d charges for services to c o n s u m e r s did not share in this brief d o w n w a r d m o v e m e n t . T h e price of services rose a n a v e r a g e of 4 l/z percent f r o m Septe m b e r 1948 to M a r c h 1950.

Prices drifted d o w n w a r d throughout 1949 a n d r e a c h e d their lowest point in F e b r u a r y 1950. T h e b r o a d down-trend w a s m a r k e d b y counterbalancing m o v e m e n t s f r o m m o n t h to m o n t h a m o n g c o m m o d i t y groups. I m m e d i a t e l y after C h r i s t m a s 1948, a n d continuing a l m o s t up to s u m m e r of 1949, widely a d v e r tised sales w e r e featured for apparel a n d housefurnishings , a n d the indexes for these groups m o v e d d o w n a l m o s t steadily throughout the year. F o o d prices also w e r e generally down, in contrast to increases in rents a n d s e r vices as well as s o m e other c o m m o d i ties, e.g. , fuels a n d automobiles.

T h e total index of c o n s u m e r prices, including c o m m o d i t i e s a n d services, declined less than 5 percent f r o m Septe m b e r 1948 to F e b r u a r y 1950; retail prices of c o m m o d i t i e s (excluding rents a n d services) fell 7 l/2 percent. Retail food prices d r o p p e d about 9 1 /Z percert in this period; apparel prices w e r e dow n 8 percent; and housefurnishings declined 6 l/Z percent. Fuel prices fell s e a s o n ally in m i d - 1948, returned to their p e a k level b y F e b r u a r y 1949 a n d c o n tinued to a d v a n c e during the r e m a i n d e r of the year.

K o r e a n Impact, F e b r u a r y 1950 - D e c e m b e r 1951. - T h e outbreak of K o r e a n hostilities accelerated the rise in retail prices w h i c h h a d b e g u n in M a r c h w h e n food prices (principally m e a t s ) increased. In p r i m a r y m a r k e t s the military situation w a s reflected in abrupt price increases. In the first few m o n t h s after June 1950, price increases w e r e reminiscent of the 1941- 42 period. Mindful of the shortages of W o r l d W a r II, c o n s u m e r s a n d businessm e n alike e n g a g e d in a short-lived buying spree. Typical items bought in quantity b y h o u s e w i v e s w e r e nylon h o s iery, sugar, a n d coffee; these goods had b e e n scarce during W o r l d W a r II. D u r able goods, h o m e s , automobiles, household linens, a n d even apparel w e r e also included in the rus h of buying. In a few w e e k s basic p r i m a r y m a r k e t c o m m o d i t y prices a d v a n c e d 15 percent. B y August total c o n s u m e r prices w e r e up 3 p e r cent f r o m February, food prices h a d a d v a n c e d 7 l/2 percent. Prices continued u p w a r d during the last half of 1950 a n d into 1951* B y the end of 1950 retail food prices w e r e 5 percent a b o v e June 1950. T h e increase in housefurnishings prices w a s twice that of foods.

T o prevent another inflationary rise of the m a g n i t u d e of 1942-48, the g o v e r n m e n t initiated actions beginning in July 1950 to control credit, construction, a n d scarce materials, a n d to p r e p a r e for possible regulation of prices a n d w a g e s . T h e D e f e n s e P r o duction Act of 1950 w a s p a s s e d b y the C o n g r e s s on S e p t e m b e r 8, 1950, a n d voluntary restraints on prices and w a g e s w e r e attempted. Prices continu e d to advance, h o w e v e r , a n d general controls w e r e placed over m o s t prices at D e c e m b e r 1950 a n d J a n u a r y 1951 levels b y the G e n e r a l Ceiling Price Regulation ( G C P R ) of J a n u a r y 25, 1951. A c o m p a n i o n order froze w a g e s at the level of J a n u a r y 26. Th


F e b r u a r y 1951; later in 1951, w a g e adjustments g e a r e d to "cost-of-livingn increases, as m e a s u r e d b y the C o n s u m e r Priced Index, w e r e permitted. Beginning in the spring of 1952, the e m e r g e n c y h a d p a s s e d a n d price c o n trols w e r e gradually relaxed -- first on c o m m o d i t i e s selling b e l o w ceiling a n d b y m i d - y e a r on all c o m m o d i t i e s .

T h e s e controls, plus the end of the buying splurge, effectively allayed fears of continued inflation. D e m a n d for c o n s u m e r g oods b e c a m e m o r e n o r m a l ; inventories b e g a n to increase a n d retailers c e a s e d their s c r a m b l e for goods. F r o m a n a v e r a g e m o n t h l y a d v a n c e of 1 percent f r o m June 1950 to F e b r u a r y 1951, the rate of increase for retail prices s l o w e d to 0. 2 percent a m o n t h f r o m F e b r u a r y to June 1951 a n d then stabilized temporarily. Prices again rose for a brief period in the fall.

T h e general level of retail prices rose 13 percent f r o m F e b r u a r y 1950 to D e c e m b e r 1951 a n d retail food prices a d v a n c e d 19 percent. Retail prices of apparel a n d housefurnishings rose less than foods a n d r e a c h e d their p e a k even before the en d of 1951. A u g m e n t i n g the u p s w i n g in c o m m o d i t y prices w a s the continued rise of rents a n d services.

Relative Stability, D e c e m b e r 1951- D e c e m b e r 1952. - Relative stability in prices of c o n s u m e r goods characterized the yea r 1952 (and extended well into 1953). Although c o n s u m e r d e m a n d for m a n y types of goods r e m a i n e d high, p r o duction of c o n s u m e r goods w a s e x p a n d ed a n d prices c h a n g e d little on the a v e r age. D e f e r r e d d e m a n d s for m o s t c o n s u m e r goods f r o m W o r l d W a r II w e r e no longer apparent. Resistance to high prices developed a n d c o n s u m e r s w e r e spending m o r e cautiously.

T h e apparent equilibrium in the a v e r a g e price level m a s k e d divergent m o v e m e n t s of prices for c o m m o d i t i e s a n d services. Services a n d rents c o n tinued to a d v a n c e steadily, w h e r e a s apparel, housefurnishings, a n d other

c o m m o d i t i e s fell s o m e w h a t a n d then fluctuated within a n a r r o w range. F o o d prices a d v a n c e d to a n e w high b y s u m m e r , but e a s e d t o w a r d the end of the y e a r as supplies of m e a t s , dairy p r o d ucts, a n d eggs increased. D e f e r r e d d e m a n d for a u t o m o b i l e s , h o w e v e r , c o n tinued during 1952, a n d controls on the use of m e t a l s restricted production b e l o w d e m a n d levels a n d sustained u s e d car prices.

C o m m o d i t y G r o u p s

T h e m o v e m e n t of the a v e r a g e level of retail prices described a b o v e is a c o m p o s i t e of contrasting a n d differing price changes for c o m p o n e n t parts of the C o n s u m e r P r i c e Index. A clearer picture of the price history of these y e a r s is obtained b y analyzing these c o m p o n e n t parts, a n d especially b y d r a w i n g a distinction b e t w e e n the price m o v e m e n t s of physical c o m m o d ities a n d i tems classified as services (chart A). Generally, the c o m m o d i t y g r oups accou n t e d for the fluctuations in the index w h e r e a s the service elem e n t s strengthened the prevailing u p w a r d trend. T h e m o v e m e n t of retail prices of c o m m o d i t i e s c o r r e s p o n d e d closely to c h anges in p r i m a r y m a r k e t prices a n d w a s m o r e responsive to c h anges in the general e c o n o m i c situation than w e r e service rates, w h i c h generally c h a n g e slowly a n d lag behind c o m m o d i t y p r i c e s . 2

T h e p o s t w a r turning point in prices of c o n s u m e r goods c a m e in S e p t e m b e r 1948; the l o w point w a s r e a c h e d in March 1950 (table 2). T h e decline in retail c o m m o d i t y prices a m o u n t e d to about 7 1/2 percent during this period. M o v ing in the s a m e direction as p r i m a r y m a r ket prices, but at a s l o w e r rate, retail c o m m o d i t y prices a d v a n c e d through 1950 a n d the first part of 1951 to a point well a b o v e late 1948, a n d then leveled off. T h e D e c e m b e r 1952 level w a s 5,3 p e r cent a b o v e S e p t e m b e r 1948.

2 A m o r e c o m p l e t e discussion of the relative m o v e m e n t of these t w o c o m posite grou p s is contained in a n article in the M a y 1954 issue of the M o n t h l y L a b o r R e v i e w , (pp. 516-521).



Table 2 Percent Change and Turning Points in the Trend of Consum er P r i c e s , 1948 - 52

Group

A ll items

Comm odities \ J . . . .S e r v ic e sJ V .............................Rent ........................................

Food ........................................Apparel ................................Housefurnishings ...........Solid fuels and fuel oil Gas and electricityTransportation .............M edical care .....................Personal care ................Reading and recreation

1948Peak

1 949 -50Low

1 951 -52Peak

Percent change1948 peak

to1 949 -50 low

1 9 4 9 -50 low to

1 9 5 1 -52 peak

Aug. - Sept. F eb. 1950 Aug, -N ov . 52 - 4. 2 4-13. 8

J_/ Sept. _ l / M a r . 1950 1 / Dec. 1951 - 7. 3 + 14 .9_ _ 1 / D ec . 1952 _ _ _ _- - - - Dec. 1952 - -

July F eb. 1950 A u g . 1952 - 10, 1 + 20. 8Oct. July 1950 Sept. 1951 - 8 . 5 + 1 3 .4Oct. June 1950 M ay 1951 - 7. 1 + 15. 1Nov. M ay 1949 Dec. 1952 - 4 .6 + 18 .5

Dec. 1952N o v . -D e c . 52

_ _ Dec. 1952Oct. M ay 1950 Dec. 1952 - 3 .9 + 13. 6

- - - - Dec. 1952 - - - -

l / Indexes available quarterly - in M a rc h , June, Septem ber, and D ec em ber .

Services on the other h a n d m o v e d steadily u p w a r d , continuing the trend w h i c h h a d persisted since 1940.T h e total a d v a n c e in prices of services f r o m D e c e m b e r 1948 to D e c e m b e r 1952 w a s about 18 percent (table 1).

B y D e c e m b e r 1952 c o n s u m e r prices h a d a d v a n c e d 92 percent a b o v e their 1939 a v e r a g e level. C o m p a r e d with this p r e - W o r l d W a r II year, food prices h a d increased m o r e than 140 percent; apparel a n d housefurnishings prices h a d a d v a n c e d over 100 percent; a n d solid fuels a n d fuel oil over 118 percent. Prices of services as a group h a d a d v a n c e d m u c h less-- 66 percent -- a n d residential rents w e r e only 39 p e r cent higher (table 3).

Table 3 Percent Increase in Consum er P rices from Selected P rew ar Dates

Consum er p r i c e sTo D ecem ber 1952 from ___

Y ear _ . 1939

June1950

A ll i t e m s .......................................... 9 1 .9 12. 0

Comm odities ............................. 115. 8 10. 9Services .......................................... 66. 5 1 4 .4R e n t ..................................................... 39. 3 1 1 .0

Food .................................................. 141. 5 13. 2Apparel .......................................... 100. 1 8 .9Housefurnishings ..................... 102. 7 11. 1Solid fuels and fuel oil . . . . 118. 5 14. 6Gas and electricity ................ 0. 7 2 .9Transportation ........................... 87. 1 17. 3M edical care ................................ 64. 3 13. 2Personal care ........................... 88. 8 13. 4Reading and recreation . . . . 7 1 .4 5 . 4



Food. - M o v e m e n t s in retail food prices w e r e the m o s t important influence on the a v e r a g e c hange in the level of c o n s u m e r prices f r o m the fall of 1948 through 1952. F o o d prices at retail tended to lead both in m a g n i t u d e a n d timing of price c hange (chart B). T h e y r e a c h e d a p o s t w a r p e a k in July1948, a l m o s t 50 percent a b o v e June 1946 w h e n w a r t i m e price controls w e r e r e m o v e d . A t this point the effects of a r e c o r d 1948 crop (after a poor 1947 crop), large s h i pments of livestock to m a r k e t s , a n d g r o w i n g c o n s u m e r r e sistance to the existing high levels of prices, resulted in a definite downturn. P e r capita c o n s u m p t i o n of m e a t declined a n d prices d r o p p e d sharply. A t the s a m e t i m e dairy products prices fell contra seasonally. Despite s o m e fluctuations, partly seasonal, trend of food prices w a s generally d o w n w a r d throughr out the latter part of 1948 a n d during1949, reaching a level in F e b r u a r v 1950 10 percent b e l o w July 1948.A m o n g the food subgroups only b e v e r ages a n d sugar a n d sweets m o v e d u p w a r d (table 4).

W i t h the outlook for r e d u c e d supplies, food prices generally turned up in M a r c h 1950. T h e rate of a d v a n c e

increased considerably in M a y , June, a n d July 1950 as the result of d a m a g e to crops f r o m b a d weather, the s u d d e n c h a n g e in the general e c o n o m i c situation^and w a r - s c a r e buying. In these 3 m o n t h s , a v e r a g e retail food prices inc r e a s e d 1.3 percent, 1.7 percent, a n d 2. 5 percent, respectively. B y D e c e m b e r 1950 they w e r e 11 percent a b o v e F e b r u a r y .

All important food gro u p s s h a r e d in this a d v a n c e (table 4). T h e m e a t s , poultry, a n d fish group, w h i c h r e p r e sents about a third of the total food index, rose 14 percent; prices of c e reals a n d b a k e r y products, generally quite stable, rose 5 percent; prices of eggs an d fresh fruits a n d vegetables, w h i c h n o r m a l l y display the greatest seasonal m o v e m e n t , w e r e m o s t volatile. T h e rise of 77 percent in egg prices f r o m F e b r u a r y to D e c e m b e r 1950 raised the national a v e r a g e price of eggs to 87 cents a dozen, the highest level in 3 0 years. This startling price rise reflected the effects not only of seasonal trends but also the increasing use of eggs as a substitute ibr m o r e costly m e a t s , a n d substantial p u r c h a s e s of dried eggs u n d e r the price support p r o g r a m .

Table 4 Percent Change in Retail P r ices of Food for Selected P e r io d s , 1948 - 52

Group

Percent change1 July 1948

toFeb. 1950

Feb. 1950 to

Dec. 1950

Dec. 1950 to

Dec. 1952

Dec. 1948 to

Dec. 1952

Total foods ............................................................................. - 10. 1 + 11 .0 + 6 .3 + 12. 1

C e r ea ls and bakery products ................................ - 1. 1 + 5. 1 + 9 .5 + 14. 3M e a ts , poultry, and fish ........................................ - 1 5 . 2 + 14. 1 t 3 .6 + 8 .7Dairy products ............................................................... - 1 2 . 2 + 5. 7 + 11 .9 + 9 . 0Fruits and vegetables ................................................ - 6 .6 + 2 .3 + 1 5 .9 + 2 2 .9Eggs ............................................................................................. - 3 1 . 1 + 77. 1 - 1 9 . 1 - 7. 1B ev erages ............................................. .. ............... . . . . + 47. 8 + 8. 0 + 6 .0 + 67. 0Fats and oils ..................... .................................................. - 3 3 . 5 + 18 .6 - 1 1 . 8 - 2 4 . 2Sugar and sweets .......................................................... + 4 . 2 + 3 .9 + 3 .0 + 10. 1


Chart B

CONSUMER PRICE INDEXM A J O R G R O U P S O F G O O D S A N D SERVICES

1939 - 52

UNITED STATES DEPARTMENT OF LABORBureau el Labor Statistics


8 C O N S U M E R P R I C E S I N T H E U N I T E D S T A T E S

R etail food p rice s continued to clim b slow ly after issuance of the G eneral Ceiling P rice R egulation in January 1951 and then fluctuated during 1952; by D ecem ber 1952 they w ere one percent below D ecem ber 1951 but 18 percent higher than their F ebruary 1950 low. The p rice control regulation covered item s which represented about 85 percent *of the retail food p rice index weight. About half of the index weight represen ted foods which w ere subject to parity regulations or w ere below legal m inim um s and placed under fle x ible con tro ls , and about a third re p re sented item s subject to firm con trol.

In creases in b eef and veal prices sparked both the 1951 r ise and the 1952 decline in food p r ic e s . R ising cattle p rice s in 1951 led to severa l ceiling p rice adjustm ents to p erm it packers to cover c o s ts , and these in creases w ere p assed on to con su m ers. In 1952, how ever, production of livestock was very high and m arketings exceeded previous peaks.

A s a re su lt, low er grades of b eef and and veal sold to com m ercia l u sers re g iste red sizable p rice reductions. P ric e s to con sum ers of better grades declined quite steadily and in December 1952 w ere 7 l / 2 percent low er than the previous year and only 2 percent above 2 years e a r lie r . Pork p rice s which w ere affected by m uch different p r o duction and m arket situations, w ere slightly higher at the c lo se of 1952 than at the end of 1950. Poultry p rice s in creased 15 percent during this period .

In the 2 years ending D ecem ber 1952, food p rice s rose an average of 6 p ercen t, partly because of the upvard p rice m ovem en ts of uncontrolled foods, esp ecia lly fresh fruits and vegetab les. Only p rices of egg s, fa ts , and oil w ere low er at the end of 1952 than they w ere 2 years e a r lie r . Table 5 shows a v e r age retail p r ice s for im portant foods in this period .

T a b l e 5 A v e r a g e R e t a i l P r i c e s o f S e l e c t e d F o o d s , D e c e m b e r 1 9 4 8 , D e c e m b e r 1 9 5 0 ,a n d D e c e m b e r 1 9 5 2

I t e mA v e r a g e r e t a i l p r i c e 1 /

u n i t D e c e m b e r1 9 4 8

D e c e m b e r1 9 5 0

D e c e m b e r1 9 5 2

B r e a d , w h i t e ............................................................................... P o u n dc e n t s

1 3 . 9c e n t s

14 . 7c e n t s

1 6 . 2R o u n d s t e a k ..................................................................................P o r k c h o p s ....................... ............................................................

P o u n dP o u n d

88. 3 6 7 . 4

100. 8 7 1 . 5

1 0 8 . 1 7 2 . 3

D e g n f l a m b ................................... .. .................................. ... P o u n d 68. 8 7 7 . 5 7 5 . 3M i l k , d e l i v e r e d ................................................................... Q u a r t 22. 6 2 1 . 9 2 4 . 8R u t t e r .................................................................................... P o u n d 7 5 . 6 7 6 . 3 8 1 . 7O r a n g e s , f r e s h .......................... ........................................... D o z e n 4 3 . 4 4 7 . 3 4 7 . 2P o t a t o e s ....................................................................................... 15 p o u n d s

N o. 2 c a n7 4 . 8 5 9 . 4 1 0 9 . 4

C a n n e d t o m a t o e s ....................... ........................................... 16 . 2 15 . 8 1 7 . 9C o f f e e .............................................................................................. P o u n d 5 2 . 1 8 3 . 3 86. 6L a r d ................................................................................................. P o u n d 2 7 . 0 2 2 . 3 1 6 . 1S u g a r , w h i t e ...............................................................................E g g s ................................................................................................

5 p o u n d s D o z e n

4 6 . 57 5 . 2

5 0 . 1 86. 8

5 2 . 47 0 . 4

1[ B a s e d on th e a v e r a g e o f 5 6 c i t i e s p r i c e d f o r th e f o o d i n d e x .



A pparel and T extile Housefuriiswin g s . - P rices of apparel and textile housefurnishings contributed to the fluctuation of the general retail com m odity price lev e l. The 1948 peak for apparel p rices had been reached in O ctober, severa l months after the food p rice peak, at a point about double the 1939 level and 28 percent above June 1946 control le v e ls . Slight d ecreases in apparel and housefurnishings p rice s w ere reported at the end of 1948, led by price reductions for cotton goods. Contributing factors w ere low er costs of raw cotton, stronger consum er r e sistance to high p r ic e s , and the contro ls over installm ent buying. A fter C h ristm as 1946 the declines spread to other goods. W idely advertised sa les w ere prevalent and continued until the sum m er of 1949. P rice reductions on nationally ad vertised brands of apparel item s w ere significant. In the third quarter of 1949 reductions extended even to shoes which had re siste d the initial weakening of the retail p rice structure. From the 1948 peak, the apparel index dropped 8 l / 2 p ercen t, though not without interruption, to July 1950, when it turned up along with the rest of the index, as costs and demand m ounted. The r ise in apparel p rices by F ebruary 1951 was nearly 10 p e r cent.

F irst portents of an end to the p rice r ise s for these com m odities were the cancellation of large m ilita ry contr a c ts , expanding in v en to ries , improved quality of m erch an d ise , reappearance of low er price lin e s , and prom otional sa le s . Soft goods m arkets w ere noticeably weak; p r ice s both of cotton and wool w ere low er to the fa rm e r and these reduced p rice s w ere reflected in w holesale p rice s of sem im an u factured textile products. R etail p rices leve led off for apparel sooner than for m o st other grou p s, from a peak reach ed in Septem ber 1951. A fter that date, the apparel index declined gradually every month until the latter half of 1952. T extile housefurnishings showed a

sim ila r trend. In the sum m er of 1951 w idespread prom otional sa les in retail stores w ere reported for rugs and other te x tile s .

A t the end of 1952, apparel prices on the average w ere at a lm ost the same lev e l as 4 years e a r lie r . W ool apparel p rice s w ere up about 7 percent but cotton apparel was 4 percent low er. Rayon and nylon apparel p rices w ere n early 2 0 percent below p rices p r e vailing at the end o f 1948. Footw ear was about 9 percent higher in p r ice . Included among the a rtic le s showing g reatest in crea ses in p rice w ere menfe overcoats and sw e a te rs , m e n ?s union su its , women*s g ird le s , and m e n 's street shoes. Item s registerin g the la rg e st d ecreases included w om en 's rayon d re sse s and s lip s , rayon yard good s, nylon h o se , and w om en 's fur coats . In D ecem ber 1952 p rice s of bed sheets w ere m o re than 5 percent low er than 4 years e a r lie r , w hereas A xm in ster rugs w ere m uch higher p riced .

Durable G oods. - New developm ents in consum er durable goods indu stries attracted attention in this period but their effect on the m o v e m ent of average p rices to con sum ers was lim ited . B ecause of the use of m eta ls and other scarce m a te ria ls in their m anufacture, m any of these goods had been scarce during W orld W ar II. A ccum ulated demands for these p ro ducts w ere not yet com pletely satisfied by 1948 and new demands w ere created by higher in c o m e , record construction of new housing, introduction of te le v ision , and postw ar m odels of autom ob ile s . The scar.e buying of the second half of 1950 was noticeable particu larly in these com m od ities. A s a group, housefurnishings (which a lso includes textile housefurnishings) ro se 13 p e r cent in price between June 1950 and F ebruary 1951. R etail p rice s of radios w ere up about 13 percent; washing m ach in es, 1 0 percent; and sto v e s , 16 percen t.


1 0 C O N S U M E R P R I C E S I N T H E U N I T E D S T A T E S

The buying panic did not last long. The im m ediate m ilita ry situation demanded le s s than had been anticipated of m a teria ls going into the m anufacture of consum er goods. Heavy in ven tories, tight controls over use of m e ta ls , and credit re str ic tio n s , a ll served to curb the p rice r is e s . F inally , the GCPR fro ze p rice s at January 1951 le v e ls .

During 1951, demand for con sum er durables fe ll noticeably* By 1951 the m ajority o la u to m o b ile owners had replaced their prew ar cars with postwar m odels and half of the cars owned w ere le s s than 5 years old. The ratio of p rices of used cars to new cars rem ained high but in the spring of 1951 substantial reductions w ere m ade in p rices of late m odel used c a r s . Owing p r im a rily to the steel strike which halted new car production, used car p rices strengthened again in 1952. P rice cuts, either through special sa les or as d is counts, w ere frequent in 1952 particu la rly for the m ajor household appliances. A s the future of te levision becam e m ore a ssu red and production of re ce iv e rs inc re a se d , reductions in list p rices as w ell as in actual retail selling p r ic e s , w ere reported .

In m ost consum er durable goods industries pricing p ractices are characterized by uniform suggested retail p rice s which rem ain fixed for long p e r iods* Com petition at the retail lev e l o ften takes the fo rm of special discounts to cu sto m ers (or, c o n v ersely , bonus p r ic e s ) , t ie -in sa le s , charges for installation , and generous tra d e -in allow an ces* It is so m etim es difficult for the Bureau of Labor Statistics to obtain substantiated reports on actual price changes for these goods or to evaluate their im portance on the average . The index p xobably understated both upward and downward m ovem ents in the p rices of these com m odities that occurred during the 4 -y e a r period covered by this report.

On balance, how ever, the total change in actual p r ice s is fa irly m easu red by the following reported p rice changes over the total period:

P ercen t Change D ecem ber 1948 to

D ecem ber 1952

F u r n itu r e ....................................... + 1 .1Sewing m achine ........................ + 7 . 4W ashing m achine .................. + 1 . 3Vacuum cleaner . . ................ + 8 . 6R efrigerator ............................. - 9 .7Cook stove ............................... + 0. 4New autom obiles ................... + 1 9 .5

The com bined relative importance of consum er durable goods was only 1 0 percent in the B u reau fs index, r e fle c ting their re latively infrequent purchase for fam ily u se .

F u e ls , G a s , and E lectr ic ity . - The fuel group of the index which includes solid fu el, fuel o ils , g a s , and electric ity c o m p rises about 3 percent of the index by weight. P ric es of solid fuel and fuel oils w ere m ild ly influenced by the general downturn in p rices from the fall 1948 peak. They declined for about a y e a r --th e total drop was le s s than 5 p e rc e n t--b u t then turned upw ard and in creased rather steadily to the end of 1952 when they w ere 13 p e r cent above their p rice s at the end of1948. During this 4 -y e a r period retail p rice s of bituminous coal rose 1 0 p e r cent, anthracite , nearly 25 p ercen t, and fuel o ils , 6 percent.

Gas and e lectric ity rates have shown rem arkable stability over a long period . The trem endous expansion of these industries to satisfy growing demands for e lectric light and power and gas for residential heating, and continued public regulation, have r e sulted in the m aintenance of relatively low rates to con sum ers in spite of increasin g production c o sts . In the years 1949 to 1952, gas and e lectric ity ' b ills in creased only a little over 4 p e r cent.


A N A L Y S I S O F P R I C E T R E N D S 1 1

M iscellan eou s S e r v ic e s . - The group of se rv ice s covered by the Consum er P rice Index includes u tilities , personal s e r v ic e s , m ed ical fe e s , r e p a ir s , m otion picture a d m ission s, and sim ila r ite m s. Including rent, which frequently p a ra lle ls p rice changes for se r v ic e s , this group accounts for about one third of the weight in the total index. The steady r ise in p rices which has ch aracterized the se rv ice s group for so long a tim e is in striking contrast to the m ajor fluctuations in the upward p rice m ovem ent of com m odities (chart A ). The re latively steady upward m ovem ent of serv ice p rice s since 1940, and their apparent strong resistan ce to price d eclin es, re flects the continued increase in real w ages and consum er incom e over the war and postw ar y e a r s , and the e v e r-in c re a sin g demand for se rv ice s that accom panied this im proved econom ic position of con su m ers.

Service item s are m o re hom ogeneous than com m odities with respect to price change, and ch aracteristica lly respond slow ly to econom ic changes.A num ber of th em , like public tra n sportation, are regulated by federal or local authorities. O th ers, such as p h y sicia n s 1 fe e s , tend to be fixed by tradition. The average r ise in se rv ice s rates since prew ar days, th erefo re , has been le s s than that of com m odity p r ic e s . P ric es of m ost se rv ice s rose about 10 to 15 percen t. A few item s such as autom obile lice n se s and fe e s , m otion picture a d m issio n s , and beauty shop se rv ice s in creased from 3 to 5 percent; and a few oth ers, autom obile insu rance, local tran sit fa r e s , hospital r a te s , and m e n s h a ircu ts, advanced 25 percent or m o re .

The listing below shows the ex tent of the r ise in p rice s for individual se rv ice item s in this 4 -y e a r period:

P ercent of In crease D ecem ber 1948 to

D ecem ber 1952

Autom obile r e p a i r s ..................... 1 3 .3Autom obile lice n se s and fees 4 . 9Autom obile in s u r a n c e ................ 30. 2L ocal transit fares ..................... 40 . 2R ailroad fares ................................ 9 .2

P h y sic ia n s 1 fees ........................ 1 1 .9D e n tists 1 fees ................................ 1 1 .1H ospital rates ............................... 34. 3

Laundry se rv ice s ........................ 1 5 .8Dry cleaning ................................ 1 0 .7Shoe rep airs .................................. 1 1 .7D om estic serv ice ........................ 15. 8Telephone ....................................... 1 8 .4

N ew spapers .................................. 14. 0M otion picture ad m ission s . . 2 .6

M e n s haircuts ............................. 2 4 .6Beauty shop se rv ice s ............. 4 . 8

R ent. - R esidential rents have in creased steadily in recent y e a r s , the rate of in crease depending largely on the degree and effectiven ess of rent c o n tro ls . 3 Rents w ere controlledm uch m o re rigidly than com m odities and se rv ice s p rices during W orld W ar II. A s a result they rem ained a lm ost sta tionary while other p r ice s w ere risin g sharply. In m i d - 1947, how ever, new housing w


A large proportion of rental housing, how ever, was built m any years ago and is below the quality standards of new housing. N e v e rth e le ss , a sizable differential in rents existed between new and old houses of com parable quality; this differential was estim ated at 15 to 20 percent up to 1946 and BO- 75 percent after decontrol in m id - 19474

A fter a rapid spurt in m id - 1947, rents ro se steadily. Under the 1951 control leg isla tion , individual rent inc re a se s of 20 percent above June 1947 w ere p erm itted . Underlying the rise in rents was the housing shortage, and the demands of landlords for re lie f from higher taxes and repair c o sts , as w ell as for higher p rofits .

In le s s than 2 y e a r s , from M arch1947 to D ecem ber 1948, rents jumped 12 p ercen t, and between D ecem ber1948 and D ecem ber 1952 another 17 percent in crease was re g iste red . N e v e rth e le ss , of all the groups in the Consum er P rice Index, except gas and e le c tr ic ity , rent showed the sm a lle st rise from p r e -W o r ld W ar II le v e ls .

The upward trend of m onthly rent paym ents does not describe com pletely the rising costs of housing to consumers. Indirect p rice in cre a ses w ere effected through poorer janitorial and other se r v ic e s , elim ination of con cessions such as free rent, and a reduced amourt of redecoration and rep airs by landlords. Shortages of dw ellings available for rent forced m any fam ilies to buy hom es at greatly in creased p r ic e s , or to rent m o re expensive hom es than they wanted.

In addition to the forced shift from renter to owner status, there has been a growing d esire for hom e ownership by m o d e ra te -in co m e fa m ilie s .

4 See E stim ate of New Unit Bias inCPI Rent Index, Monthly Labor Review, July 1949 (pp. 47 and 48) and C o rr e c tion of New Unit B ias in the Rent Index in Bureau of Labor Statistics Bulletin N o. 1039, Interim Adjustm ent of Cons u m e r s 1 P rice Index (p. 7. )

Since the m id - 1 93 0 fs the in crease in hom e ownership has been pronounced.In 1 93 4 -3 6 le s s than one third of urban w a g e-e a rn e r fa m ilie s covered by the index w ere hom e o w n ers. During 1949, with G overnm ent a ssista n ce and encouragem ent through lib era l m ortgage p ro v isio n s, a private building program of "e c o n o m y 11 housing was begun to m eet the needs of m id d le -in co m e fa m ilie s . V irtually a ll hom es w ere bought under m ortgage. V ery few hom es were available at te rm s to m eet the needs of low -in com e fa m ilie s . In 1949 the average p rice paid for new hom es in 15 m etropolitan areas surveyed was about $ 1 1 ,0 0 0 . 5 P ric e s paid for h o m e s, and th erefore the size and quality of hom es pu rchased, varied d irectly with the incom e of the pu rch aser.

The em phasis on lo w -c o st housing dim inished in 1949 and 1950. By 1951, new houses built in urban areas w ere la r g e r , of better g ra d e , and better equipped. In the spring of 1951, the average sa les p rice s of new hom es in 1 0 m etropolitan areas was $ 1 2 , 2 0 0 . 6

Intercity Variation

F rom the end of 1948 to the end of 1952, the average change in retail prices for the United States, as m easu red by the Consum er P ric e Index, was so m e what le s s than 11 percen t. T w o-third s of the 34 cities p riced for the index experienced average p rice in cre a ses of 8 to 1 2 percen t; p r ice s in only three cities (M an ch ester, M o b ile , and New O rleans) in creased le s s than 8 percen t; and in only 7 cities (D etroit, Milwaukee, A tlan ta, B a ltim o re , Jacksonville , Houston, and Seattle) did the p rice level advance by m o re than 1 2 percen t.

P rice change for m ajor groups of item s by city during this 4 -y e a r p eriod , are shown in table 6 .

5 See New Housing Trends in 1949- 5 1 , Monthly Labor R eview , July 1951(p. 6).

Financing of New Sales Housing in M etropolitan A r e a s , Monthly Labor R eview , A p ril 1952 (p. 391).


ANALYSIS OF PRICE TRENDS 1 3

T a b l e 6 _ P e r c e n t C h a n g e in C o n s u m e r P r i c e s B e t w e e n L a s t P r i c e d M o n th s of 1 9 4 8 an d 1952

C i ty and r e g i o n a l a r e a A l li t e m s F o o d R e n t A p p a r e lH o u s e -

f u r n is h i n g sS o l id f u e l s

an d fu e l o ilG a s and

e l e c t r i c i t yM i s c e l la n e o u s

U N I T E D S T A T E S ...................... 10. 7 12. 1 17. 2 0. 3 3. 4 13. 2 4 . 5 13. 6

N E W E N G L A N D :B o s t o n .................................... 9 . 5 11. 1 13 . 1 - 2 . 4 - 0. 3 14. 8 1 . 4 14. 6M a n c h e s t e r ..................... 6. 8 8. 2 19 . 5 - 0 . 6 4 . 3 10. 5 16. 3 10. 5P o r t l a n d , M a i n e ........... 8 . 9 9 . 4 17. 0 1. 5 3. 8 9 . 2 3. 5 10. 5

M I D D L E A T L A N T I C :B u f f a l o ................................. 9 . 5 12. 0 11. 0 - 2 . 6 2. 4 19. 3 14. 6 1 4 . 6New Y o r k ............................ 9 . 2 1 1 . 9 8 . 9 2. 0 5. 0 21. 0 5. 7 9 . 1P h i l a d e l p h i a .................... 11. 6 15. 8 9 . 0 0. 8 5 . 2 1 5 . 2 1. 2 14. 8P i t t s b u r g h ......................... 10. 2 13. 0 12. 0 - 2 . 5 0. 5 8 . 9 8. 0 15 . 8S c r a n t o n ............................... 10. 9 13. 8 15. 7 1 . 4 0. 1 2 9 . 0 12. 7 13. 8

E A S T N O R T H C E N T R A L :C h i c a g o ................................. 11. 11. 5 16. 5 1. 8 3 . 6 12. 0 0 1 4 . 4C i n c i n n a t i ......................... 9 . 6 13. 4 1 1 . 9 0. 1 - 0 . 9 11.6 3. 1 12. 0C l e v e l a n d ............................ 9 . 3 10. 0 1 9 . 3 0 . 9 - 0. 2 10. 0 1 . 3 1 1 . 4D e t r o i t .................................... 12. 7 16. 1 15. 3 - 2 . 4 6. 0 6 . 5 8. 5 14 . 3In d ia n a p o l i s ...................... 8. 2 9 . 9 14. 5 - 1. 3 1. 0 8. 5 - 4 . 8 13. 6M i l w a u k e e ......................... 15. 6 12. 2 5 0 . 7 - 0 . 7 11. 1 10. 5 - 5. 1 15. 5

W E S T N O R T H C E N T R A L :K a n s a s C i t y ...................... 10. 3 10. 3 1 8 . 4 0. 3 3. 0 4 . 6 8. 7 16 . 3M i n n e a p o l i s ...................... 10. 8 13. 3 15. 0 2. 4 2. 5 2. 4 5 . 4 1 2 . 4St. L o u i s ............................... 1 1 . 9 13. 3 12. 7 - 0 . 7 5 . 3 14. 5 0 17. 1

S O U T H A T L A N T I C :A t l a n ta ................................. 1 3 . 4 12. 3 20. 0 4 . 1 6 . 9 9 . 0 4 . 7 18. 6B a l t i m o r e ......................... 12. 2 12. 4 18. 1 - 1 . 3 0. 3 1 6 . 9 - 4 . 9 20. 1J a c k s o n v i l l e .................... 12. 5 12. 5 2 9 . 4 - 2 . 3 4 . 6 1 1 . 4 - 1 5 . 4 17. 0N o r f o l k ................................. 10. 1 11. 8 2 3 . 9 - 3 . 3 1. 5 13. 1 - 2 . 1 12. 4R i c h m o n d ............................ 8. 4 7 . 2 2 5 . 8 0 4 . 7 10. 6 6. 9 14 . 2S a v a n n a h ............................... 1 1 . 4 12. 5 2 8 . 7 4 . 8 3. 2 6. 6 2 4 . 3 15. 1W a s h i n g to n , D. C . . . . 11. 1 11.6 17. 2 - 1 . 6 5. 7 22. 6 12. 8 14. 4

E A S T S O U T H C E N T R A L :B i r m i n g h a m ...................... 11. 5 7 . 9 4 2 . 3 1. 8 0. 6 10. 6 - 0 . 3 14. 3M e m p h i s ............................ 8. 8 7. 0 17. 3 2. 2 0. 1 6 . 3 0 14. 1M o b i l e ................................. 7. 8 7. 2 2 0 . 4 - 0 . 3 - 2 . 6 7. 2 1. 3 13. 1

W E S T S O U T H C E N T R A L :H o u s t o n ................................. 12. 6 10. 6 3 2 . 3 2. 0 0. 5 ( ! ) 5 . 9 16. 0New O r l e a n s .................... 7. 3 11. 2 20. 8 - 1. 1 4 . 1 0.6 - 1 . 3 5 . 0

M O U N T A IN :D e n v e r ................................. 11. 8 10. 2 17. 4 2. 7 4 . 9 9 . 5 0. 7 14. 1

P A C I F I C :L o s A n g e l e s .................... 10. 7 9 . 5 2 8 . 1 0. 6 7. 1 ( 1 ) 6. 7 11. 6P o r t l a n d , O r e g .................. 10. 1 8. 5 2 2 . 5 - 0 . 4 3. 7 9 . 7 15. 3 15. 3S a n F r a n c i s c o ................. 1 1 . 3 10. 8 17. 1 - 0 . 5 2. 4 ( 1 ) 3 0 . 1 16. 5S e a t t l e ................................. 12. 1 11. 7 22. 9 1. 2 3. 7 8. 0 - 3 . 3 16. 7

1 / I n f o r m a t i o n not a v a i l a b l e .



The greatest variation between cities occurred for ren ts , reflecting v a ria tions in the status of rent control and dates of decontrol. Am ong the 34 c itie s , the r ise in rents from 1948 through 1952 ranged from about 9 p e r cent in New Y ork and Philadelphia to over 50 percent in M ilw aukee. Other cities experiencing substantially higher rents at the end of 1952 w ere B irm in gham with a rent in crease of 42 percent; Houston, 32 percent; and Jacksonville , Savannah, and Los A n g e le s , 2 8 -2 9 percent. B uffalo, Pittsburgh, Cincinnati, Boston, and St. Louis had relatively sm a lle r rent advances. C ities which had the sm a lle st average rent increases w ere among those still under Federal or State regulations at the end of 1952. The greatest rent in creases occurred in cities in which rent had been decontrolled in 1949 and 1950.

Changes in food p r ic e s , among the 56 cities included in the food com ponent of the index, ranged from 6 . 5 percent to over 1 6 percent between 1949 and 1952, roughly the sam e as for the total Consum er P rice Index in this period . C ities in the Southern and W estern States for the m ost part experk enced sm a lle r in creases in food p rices than those in the N orthern and E astern States. During 1949, food p rice dec re a se s w ere record ed consistently in all 56 cities priced for the index. Inc rea se s ranging from 5 to 15 percent w ere record ed in 1950 and from 4 to 10 percent in 1951. Peak food p rice s for 1952 w ere reached in a lm ost a ll cities in July or August and the food price level at the end of 1952 was below that prevailing at the end of 1951 in about fo u r-fifth s of the cities p riced . V a ria tions in the tim ing and magnitude of food p rice changes between cities r e flected the influence of d ifferen ces in the availability and consum ption of seasonal ite m s.

During 1 9 4 9 -5 2 , changes in prices of apparel and housefurnishings varied le s s among the 34 cities p riced for the index, than did rents and food p r ic e s . The apparel index d ecreased from 1 to 3 percent in about l / 3 of the c ities ; increa se d from 1 to 5 percent in l /3 of the c ities ; and average price changes of le ss than 1 percent w ere reported for other c itie s . Southern cities w ere among those showing the greatest inc re a se s while E astern cities w ere p r e dominant among those registerin g d e c r e a s e s .

Housefurnishings p rice s changed m ore than apparel p r ic e s , and in all but 4 cities p rice indexes for this groip of item s w ere higher at the end of the period . In creases ranging up to 11 p e r cent (M ilwaukee) w ere recorded , and the greatest d ecrease was le ss than 3 percent (M obile). There appeared to be no regional pattern of intercity variations for housefurnishings p r ic e s .

The United States 4 -y e a r -a v e r a g e in crease in p rice s of solid fuels and fuel oil was m ore than 13 percent - m o re than for foods and m ost other groups of com m od ities . L argest inc re a se s w ere reported for N orth eastern c it ie s , with Scranton showing an advance of 29 percen t. By con trast, gas and e lectric ity b ills advanced only 4 l/ 2 percent on the a v erag e , but in creases as large as 30 percent in San F ran cisco and 24 percent in Savannah w ere reported. Gas and e lectric ity b ills fe ll in 8 cities and rem ained unchanged in 3. An average decrease of over 15 percent was reported for Jacksonville.

Intercity differen ces in the lev e ls of retail p r ice s in the years 1 9 4 9 -5 0 -5 1 w ere m easu red by differen ces in the cost of the Bureau *s City W orker !s F am ily Budget. 7

7 For a description of the budget, see W o r k e r s 1 Budgets in the United States: City F a m ilie s and Single P e r sons 1946 and 1947, Bureau of Labor Statistics Bulletin N o. 927. A lso see M onthly Labor R eview , F ebruary 1 9 51 (pp. 152- 155) and M ay 1952 (pp. 52 -


A N A L Y S I S O F P R I C E T R E N D S 1 5

The com parative p rice lev e ls of all goods and se rv ice s included in the budget (W ashington 3 1 0 0 ) in October1951, ranged from 100 in Washington,D. C . , to 87 in New O rlean s. The degree of difference between cities was very sim ila r in other years a l though som e shifting in the position of cities occurred .

Wide variations in the level of residential ren ts , including charges for heat and u tilitie s , accounted for m ost of the intercity differen ces in the general level of p r ic e s , and the v a ry ing degrees of change in rents overthe 3 years for which the budget costs were

estim ated was m ainly respon sib le for shifts in the relative positions of the c itie s . Am ong the highest rent cities w ere W ashington, R ichm ond, Houston, and M ilw aukee. Low est rentals w ere reported in New O rleans and M obile .In contrast to the wide variation in re n ts , re latively little difference was found in food p rice s between c itie s . C ities having the highest relative food p rice s w ere those in which a 3 percent sales tax was in effect. P ric e s of other goods and se rv ice s on the average varied within a narrow range from city to city.

Police *)*cUx

The section that follow s is intended to provide a sum m ary guide to the im portant developm ents related to the preparation and use of the Consum er P rice Index in the period covered by this report. It is p rim a rily a synthesis of m a te ria ls previously published by the Bureau on various a s pects of the index. F or a m o re c o m plete review of these developm ents, a rtic le s and publications re fe rre d to in footnotes and the bibliography should be consulted.

D escription

The Bureau of Labor Statistics* Consum er P rice Index m ea su res the average change in retail p rices of goods, re n ts, and se rv ice s custom arily pu rchased by city w a g e-e a rn e r and c le r ical-w orker fa m ilie s . R etail p rices used in the calculation of the index are based on detailed specifications of goods and se rv ice s and include sa les and excise ta x es. P ric es

are obtained from a representative sam ple of retail stores and serv ice estab lish m en ts, located in a re p re sentative sam ple of United States c itie s . P rices of foods are collected m onthly in all of these c itie s . P ric e s of other goods and se rv ice s are c o llected m onthly or at le s s frequent inte r v a ls , depending on the im portance of the item and the c ity , and the degree of variation in p rice change. The frequency cycle of p rice collection i s directed toward the m axim ization of accu racy in the m easu rem en t of p rice change, within the lim its of funds available for this w ork.

The index is calculated by the form ula :

R.i

= Ri - M lq aPi - l }-

( ___________< * qapi - l

P.1

P i - 1)

)

w here R. is the index num ber for the previous 1 p eriod , (qa )*s are the quantity



w eights, (P .) l s are current p rice s and (Pi j ) 1 * s are p rice s for the previous period .

The Consum er P r ic e Index has undergone severa l revision s since it was initiated during W orld W ar I. These revision s w ere n e c e ssa ry to keep the index u p -to -d ate in re sp e ct to its weight structure, and to im prove the sam ples of ite m s, s to re s , and cities that affect the collection of p rice data. The calcu lation of the index was originally based on fam ily expenditures and price data obtained during 1917 to 1919. In the fall of 1935 im proved m ethods of calculation w ere introduced, and in the late 19301 * s the first extensive revision of the index was com pleted . During W orld W ar II weights w ere adjusted to re flec t w artim e sc a rc itie s and rationing.

Throughout m ost of the period covered by this rep ort, the Bureau was engaged in a second com prehensive re v ision of the index structure that was c o m - pie ted early in 1953. In the latter part of 1950, while this revision was underway, an interim adjustm ent to the index was c arried out to effect urgently needed revision s of weights and to include new item s that had becom e im portant in fam ily spending patterns since the m id -1 9 3 0 1 * s . Calculations based on this interim adjustm ent w ere introduced into the index se r ie s in January 1951. Indexes beginning January 1950 w ere com pletely recalculated and a c o r r e c tion of the rent index was carried back to 1940, resulting in the "ad ju sted index s e r ie s .

C om parison of the Old, Adjusted, and R evised Series

Table 7 shows the changes that have been introduced in the structure and c a lculation of the Consum er P ric e Index by the interim adjustm ent and the com p rehensive rev ision . It com p ares the "old, " "ad ju sted , " and "r e v is e d " s e r ie s with resp ect to population coverage, c ities included, and item s p riced .

The Interim A dju stm en t8

The sudden developm ent of the K orean c r is is in the sum m er of 1950 focused attention on the Consum er P rice Index as an econom ic indicator, and inc rea sed use of the index in wage d eterm ination was anticipated. Following the outbreak of h o stilitie s , p r ice s of consum er goods and se rv ice s increased rapidly and at differential ra te s , and the need for adjusting the index weights to re flec t u p -to -d a te conditions becam e urgent. It was therefore decided to r e v ise the index retroactively to a date in 1950 preceding the K orean con flict, utilizing such fam ily expenditure data and other inform ation as w ere already available from the work in p ro g re ss on the com prehensive re v ision . The n e c e s sary work was com pleted in the sum m er and fall of 1950 in tim e for use in the January 1951 index.

The interim adjustm ent was planned as a set of im provem ents to the existing 3 4 -city index which would not change the basic concepts or m ethodology of the inde^ and would include only those changes that w ere u rgen t, and which could be made quickly. The following adjustm ents w ere made:

1. C orrection of the "new unit b ia s " in the rent index, 1 9 4 0 -4 9 .

2 . R evision of city population w eights.3. Addition of new ite m s.4 . R evision of item w eights.

New Unit Bias A dju stm en t. - N o rm ally , in a m arket f ree from rent controls, there is no con sistent differential in p rice between newly cons tructed housing units and com parable existing dw ell-

1A detailed report on the Interim A djustm ent, including descriptions of the various estim ating p roced u res, w ill befound in Bureau of Labor Statistics Bulletin N o. 1039, Interim A djustm ent ofthe C o n su m ers' P ric e Index, C orrectionof New Unit Bias in Rent Component ofC o n su m ers1 P r ic e Index and R elative Im portance of Item s. A lso Interim A dju stm ent of C onsum er s l P ric e Index, inM ontb-ly Labor R eview , A p ril 1951 (p. 4 2 1 ).


T H E C O N S U M E R P R I C E I N D E X 1

Table 7 - C om parison of Old, A dju sted , and R evised C onsum er P ric e Index S eries

Item Old Index Adjusted Index Revised Index

BASE PERIOD 1935-39=100_________ ____ ________________ 1935-39=100_______________________ 1947-49=100.BASIS OF INDEX

WEIGHTS.Average family expenditures derived from

1934-36 Survey of Money Disbursements of Wage Earners and Clerical Workers in 42 Cities.

Relative weights of Old Index adjusted to post-war pattern by estimates based on Surveys of Income and Expenditures in 7 Cities, 1947-49, and appiopriate postwar data from other sources such as i ecent food consumption surveys by U. S. Department of Agriculture, and from trade and official sources on production, marketing, sales, etc.

Average family expendituies derived from 1950 Consumer Expenditure Survey in 91 Cities, adjusted to reflect the 1952 expenditure pattern required to maintain the level of living charactei istic of urban wage and clerical woikers families.

POPULATION COVERAGE

"Family size 2 or more persons__________________________ Same as old index__________________ Same as old index.EmploymentOccupa

tion of chief earner or head of family.

Length of employ

Wage earner or salaried-clerical worker_______ ____do________ ___________________ Do.

1 member, at least 1,008 hours spread over 36 Head of family, 26 weeks____________ No specific requiiement but major portionment. weeks. of income of family head must be from

Income _____________ Minimum family Income of $500 and earnings Family income under $10,000 after

employment as wage earner or salaried- clerical worker.

Same as adjusted index.

Economic level. ............

of chief earner at least $300. Chief-earner, salaried-clerical workers, earning less than $2,000 during year or less than $200 during any 1 month. No upper limitation on wage earners or total earnings of all members of the family combined. No more than H of income could be from interest, dividends, rents, gifts, income in kind, etc.

No relief families either n direct or work

taxes. No lower income limit, except that families which had no incomes from wages or salaries were excluded.

No exclusion for receipt of relief, as Do.relief. such, but only families with wage

or salary earnings included.

CITY COVERAGE

Sample..................... . 34 large citiesNone less than 50,000 population; only 1 with 1950 population of less than 100,000. (56 cities for food.)

Same as old index__________________ 46 cities, ranging in size from Madill, Okla. (about 2,500 population) to New York City.

Pricing and Index Cycle. Food and fuels priced monthly in all cities. Other commodities and services priced on cycles as shown below:

....... do....................................... ............. Food, fuel, and rent priced monthly in all cities. Other commodities and services as shown below.

New York, Los Angeles, Chicago, Detroit, Philadelphia. Priced and indexes calculated monthly.

____do________________ ____ ________ Same as old index.

Boston, Cincinnati, Houston, Pittsburgh. Priced and indexes calculated monthly.*

____do ________________________ Priced and indexes calculated quarterly.

Birmingham. Priced and indexes calculated monthly.

____do __________________________ Discontinued.

Kansas City; Portland, Oreg. Priced and indexes calculated quaiterlyJanuary, April, July, and October.

____do_____________________________ Same as old index.

Atlanta, Cleveland, Scranton, Seattle, Washington. Priced and indexes calculated quarterlyFebruary, May, August, and November.

____do_____________________________ Same, except Atlanta pi iced on a March, June, September, and December cycle.

Baltimore, Minneapolis, St. Louis, San Francisco. Priced and indexes calculated quarterlyMarch, June, September, and December.

____do.______________________ _____ Same, except Minneapolis priced on a January, April, July, and October cycle.

Buffalo, Denver, Indianapolis, Manchester, Richmond, Savannah, Milwaukee, New Orleans, Norfolk. Jacksonville, Memphis, Mobile, Poitland (Maine). Priced and indexes calculated quarterly.

____do_____________________________ Discontinued.


Table 7 - C om parison o f Old, A djusted, and R evised Consum er P rice Index Series-Continuedj


CITY COVERAGEContinued

Item Old Index Adjusted Index Revised Index

Pricing and Index Cycle. Not priced. Not priced.

Not priced Not priced.

National index coverage. 34 large cities included (56 cities for food prices). Index each month based on foods priced in 56 cities; fuel in 34 cities monthly, other commodities and services in 18 cities.

Same as old index.

Canton, Ohio; Charleston, W. Va.; Evansville, Ind.; Huntington, W. Va.; Lynchburg, Va.; Madison, Wis.; Middletown, Conn.; Newark, Ohio; San Jose, Calif.; Youngstown, Ohio.

Priced on quarterly cycle for inclusion in U. S. index only; no separate city indexes.

Anna, 111.; Camden, Ark.; Garrett,. Ind.; Glendale, Aiiz.; Grand Forks, N. Dak.; Grand Island, Nebr.; Laconia, N. H.; Lodi, Calif.; Madill, Okla.; Middlcsboro, Ky.; Pulaski, Va.; Ravenna, Ohio; Rawlins, Wyo.; Sandpoint, Idaho; Shawnee, Okla.; Shenandoah, Iowa.

Priced on a 4-month cycle for inclusion in U. S. index only; no separate city indexes.

All U. S. urban (2,500 and over); monthly; based on food, fuel, and rent priced in 46 cities; other commodities and services in 18 or 17.

COMMODITY COVERAGE

Number of items (approximate).

Food___ _________Rent_____________Apparel______ ____Housefurnishings.. .Fuels________ ____Miscellaneous goods

and services. Published group indexes.

Important changes: Food away from

home.Used cars_________

HousingRent..................Home-ownership

costs.

200_______________________________________ 225......................... ................................

51 items. - _ . ___ . . _______ _____ _ 60 items.................................................37,000 dwellings - ____ .. _ ______________ 52.000 dwellings____________________62 items_________ .. - . _______________ 66 items.................................................25 items____. . . _______ _______________ 29 items___________________________10 items_____ _____ __ _ _ ______________ 11 items________ _____________ _51 items__________ ______ _______________ 58 items______ __________ _ ____

Food, rent, apparel, housefurnishings, fuel, Same as old index__________ ________miscellaneous goods and services.

Estimated to have same price movement as Same as old index__________________food consumed at home.

Estimated to have same price movement as Same as old index................. ..............new cars.

No adjustment for new unit bias__ ______ Adjusted for new unit bias . _______Home purchase not included in index. Main Same as old index----------------------------

tenance costs estimated to have same pricemovement as rents.

300.

90 items.32,000 dwellings.75 items.35 items.10 items.90 items.

Food, housing, apparel, transportation, medical care, personal care, reading, recreation, and other goods and services.

Restaurant meals priced.

Used cars are priced.

Same as adjusted index.Home purchase included. Home mainte

nance items priced and purchase price of home represented by direct pricing.


T H E C O N S U M E R P R I C E I N D E X 1 9

in gs. H ow ever, under rent control p o lic ie s which controlled older units but exem pted m ost of the new units, the m arket fo rc e s which tend to equate the rents for "n e w " and "o ld " housing of com parable quality w ere not perm itted to function. During the w ar and p o stw ar y e a r s , the rent com ponent of the index had understated the actual rise because the index techniques failed to reflect the significant difference between rents for new dw ellings when they first cam e on the rental m arket and those of com parable dw ellings a lread y in the m ark et, 9 E stim a te s10 of the effect of the understatem ent had been m ad e,bu t the data w ere too m eager to p erm it incorporating them into the index. D w elling unit su rv ey s , conducted early in 195 0 in connection with the com prehensive re v ision , provided adequate data for correction .

Two kinds of data w ere required in order to c o rrec t the rent index fo r each city: (l)th e proportion of the total num ber of rental dw ellings which w ere additions to the rental housing m arket over the 10- year p eriod , 1 9 4 0 -4 9 , either through new construction or con version of e x isting structures and (2) the average d ifference in current rents between these and com parable existing dw ellings.

Both kinds of data w ere obtained fro m the Dw elling Unit Su rveys, ( l)T h e proportion of tenant-occupied dwellings which had been constructed after 1940 ranged fro m 4 percen t in C h icago, St. L o u is , and Scranton to over 40 percent in M obile and N orfo lk . (2) F or the se c ond type of data, it w as n e c e ssa ry to separate the sam ple of tenant-occupied dwelling units into groups having the

9 The C ost of Living Index of the Bureau of Labor Statistic s , a m im e o graphed rep ort, F eb ru ary 2 5 , 1944. The R eport of the P resid en t *s C om m ittee on the C ost of L ivin g, 1945.

1 0 The Rent In d e x --P a r t 2: M ethodology of M easu rem en t, Monthly Labor R eview , January 1949 (pp. 6 6 -6 7 ) , a lso r e printed as Serial N o. RJ 947 ; and Estim ate of New Unit B ias In C P I Rent Index, Monthly Labor R eview , July 1949 (p. 4 5 ), or Serial N o. R. 1965.

sam e quality c h a ra c te r istic s . Within each of these groupings the d ifferen ces in the average rent for the new and old units w ere com puted and averaged .

Quality ch a ra cteristics of the dw ellin g unit utilized in this w ork w ere r e lated to num ber of ro o m s, bathroom and plumbing fa c ilit ie s , kind of heating equipm ent, kind of refrigeration ,w h eth er utilitie s and furniture w ere included in the rent, structural c h a ra c te r istic s , and type of stru ctu re--d e ta ch ed dw elling or apartm ent. The average rent differen tials by c ity , as determ ined by the su rv ey s , ranged fro m a low of 4 percent for P ittsburgh to a high of 105 percent for D en ver.

C orrection factors w ere obtained for each city by com bining the relative proportion of new rental housing to old rental housing, and the percentage rent differen ces between new and old rental units. The application of these c o r r e c tion factors to the January 1950 index had the effect of raisin g the United States nall ite m s 11 index by 0. 8 percent and the rent index by 5. 5 p ercen t. The d is tr ibution of these adjustm ents fro m 1940 forw ard w as estim ated , and published indexes for the 10-year period w ere corrected accord in gly .

R evision of Population W eigh ts. - R evised population weights for com bining 3 4 -city data into a national index for a ll ite m s , and 5 6 -c ity data into a national food index, w ere calculated on the b asis of the 1950 decennial c e n su s . The city population w eights in use at the tim e of the adjustm ent had been based on Bureau of the C ensus estim ated population counts for 1942 derived fro m M ay 1942 registration s for sugar rationing. It is a gen eral practice of the B u reau to re v ise population w eights when current figu res becom e availab le .

Addition of New Ite m s. - A djustm ents to the lis t of item s p riced for the index w ere designed to m ake the list m ore representative of goods and se rv ices in the current m a rk e ts , and to im - p rove the sam ple of item s for m e a s



uring price change. Item s added because of their in creased im portance in consum er expenditures w ere: frozen p eas, straw b erries , and orange juice concentrate; canned baby foods; group hosp italization paym ents; hom e perm anent wave r e fills ; te levision se ts ; and b e er . Item s added with a view to im proving m ea su re m ent of price change included layer cake, fran k fu rters, ice c re a m , cola drinks, grape je lly , m en 1 s rayon suits, men* s w ork g lo ves, women* s rayon b lou ses, boys* jean s, cotton ru gs, dinette se ts , e lectric to a ste rs , alum inum pans, v elocip ed es, and gas for space heating.

R evision of Com m odity W eigh ts. - The m o st urgent need for making the interim adjustm ent of the index was to bring the index com m odity weights up to date. P o stw a r studies made by the Bureau showed that im portant changes in consum er spending patterns had occu rred since the 1 9 3 4 -3 6 period when the index w eights had la st been determ ined. Since the procedure used in calculating the index holds quantity weights constant, seriou s weight d is locations w ere evident in the index by1950.

W eights w ere revised com pletely for 7 cities in which surveys of fam ily expenditures had beenm ade between 1946 and 1949o 11 These expenditures w ere adjusted for quantity and price changes to 1950. F or c ities not surveyed in these y ea rs , rev ision s of index weights w ere based on the adjustm ents made for the seven c itie s , and on relations

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