Prices across the United States rose at an estimated annual rate of 3.3% during the first six months of 2000. This rate is sharply higher than the 1.9% annual increase during the same period in 1999. The steep climb is due mostly to soaring energy prices stemming from the rising costs of fossil fuels. The anticipated sharp increase in inflation sparked action by the US Federal Reserve, which raised interest rates six times between June 1999 and May 2000. Inflation is now believed by many economists to be slowing during the final half of this year.
The inflation rate is generally defined as the rate of change of the Consumer Price Index (CPI) as measured by the US Bureau of Labor Statistics (BLS). The Consumer Price Index (CPI) is a measure of the average change in prices over time in a market basket of goods and services. The CPI is based on prices of food, clothing, shelter, fuels, transportation fares, charges for medical and dental services, drugs, and other goods and services that people buy for day-to-day living. The CPI indexes prices to 1982-1984 levels (i.e., the CPI in 1983 is 100). The BLS calculates the CPI for 87 urban areas, including St. Louis and Kansas City. The CPI is not calculated for states as a whole. In general, inflation rates in Missouri's urban areas tend to follow national trends, though they experience a higher level of volatility. Despite the higher rates of inflation during the first half of 2000, estimates by RAP indicate that Missouri had the fifth-lowest cost of living among states during the same period.
