example, this measure of inflation actually 

fell 0.4 percent in 2009. This represented the 

first decline in the annual average CPI-U since 

1955, and the first decline since these poverty measures were tied to the all items CPI-U. 

This meant that, unless there was a change in 

the law underlying the adjustment rules, the 

poverty guidelines would have been adjusted 

downward. Said another way, without Congressional action, if the poverty guidelines would 

be adjusted downward for 2010, some families 

making the same amount of income would no 

longer be eligible for financial assistance, and 

others would have had their level of aid reduced. As a result, Congress took action to keep 

the 2010 poverty guidelines at 2009 levels until 

at least May 31, 2010.3

The poverty thresholds, on the other hand, were 

adjusted lower in 2010, in line with the small decrease in the annual average CPI-U. For example, 

the weighted average poverty threshold for a 

family of four in 2008 was $22,025. In 2009, reflecting the slight drop in the CPI-U, the preliminary average poverty threshold was adjusted 

downward to $21,947.4

The use of the CPI in adjusting poverty values 

is mandated by law. This is only one example of 

myriad programmatic and contractual uses for 

this prominent statistic. Its influence extends 

far beyond simply being a measure of price 

changes paid by consumers. Future editions of 

this Focus series for the CPI will examine some of 

these other applications.

The Consumer Price Index (CPI) plays a critical 

role in adjusting the Nation’s measurement 

of poverty every year. Poverty thresholds are 

used by the Census Bureau to determine which 

families are poor. Poverty guidelines are used 

by the Department of Health and Human 

Services to determine eligibility for Federal 

assistance. The poverty figures are adjusted by 

the changes in the CPI to keep the real income 

levels associated with these thresholds and 

guidelines constant.1 Specifically, these annual 

poverty measures are tied to changes in the 

annual average all items Consumer Price Index 

for All Urban Consumers (CPI-U). 

To illustrate an annual adjustment, the poverty 

guideline for a family of four in the 48 contiguous States in 2008 was $21,200. Since the annual 

average CPI-U rose 3.8 percent in 2008, the poverty guideline for a family of four in 2009 was 

then adjusted upward to $22,050. Similar adjustments were made to the poverty thresholds.2

Although the annual average CPI-U typically 

increases from year to year, as in the previous 

Current Price Topics

The Use of the CPI in

Poverty Measurement

1

Consumer Price Index: First Quarter 2010

U.S. Bureau of Labor Statistics May 2010 Volume 1, Number 3
2

All Items

The all items Consumer Price Index for All Urban Consumers (CPI-U) rose at a 0.9-percent 

seasonally adjusted annual rate during the 

first quarter of 2010. (See chart 1)5 In 2009, 

this index had increased 2.7 percent, not seasonally adjusted. 

Energy

The modest increase in the all items index 

for the first quarter of 2010 was due primarily to a 9.2-percent annual rate of growth 

in the index for energy. Within energy, 

gasoline prices continued to increase in the 

first quarter of 2010, up at an 8.6-percent 

annual rate after increasing 53.5 percent 

in 2009. Natural gas prices were up at a 

29.8-percent annual rate in the first quarter 

of 2010 after falling 18.1 percent in 2009, 

and fuel oil prices rose at an annual rate of 

18.2 percent. 

Over the past few years, crude oil prices—

and subsequently retail gasoline prices—

have been quite volatile. From July 2007 

to July 2008, gasoline prices rose sharply, 

increasing 37.9 percent (not seasonally adjusted); crude oil prices peaked in July 2008 

at more than $134 a barrel. During the last 

5 months of 2008, as crude oil prices collapsed to under $32 a barrel, retail gasoline 

prices fell by more than 50 percent. In 2009, 

pump prices turned sharply higher again, 

increasing more than 50 percent, with 

crude oil prices increasing to around $70 a 

barrel by the end of 2009.6

Food

Food prices rose at a 2.3-percent annual 

Current Price Trends

Recent Modest Inflation 

Caused Primarily by Higher 

Gasoline Prices
3

rate in the first quarter of 2010, with grocery store prices increasing 3.7 percent. 

Significant increases were seen in 3 of the 

6 major grocery store food groups. The index 

for fruits and vegetables was up at a 19.7-percent 

rate, with fresh vegetable prices up at a 32.5-percent rate. Unusually cold weather early in the 

year in Florida significantly affected tomato 

prices, which rose at a 40.5-percent annual rate 

in the first quarter of 2010. Dairy products rose 

at an 8.5-percent rate in the first quarter, with 

milk at 9.9 percent. Meats, poultry, fish, and eggs 

increased at an annual rate of 4.1 percent in the 

first quarter of 2010 after falling 3.8 percent in 

2009. Within this group, egg prices have risen at 

a 12.7-percent annual rate so far in 2010.

Small or modest price declines were noted for 

the other three grocery store food groups. The 

index for cereals and bakery products fell 2.8 

percent. Nonalcoholic beverages fell 0.7 percent, 

and other food at home declined 1.0 percent. 

Grocery store price changes in the first quarter 

of 2010 were more modest than in recent years. 

Grocery store inflation was relatively high during most of 2008; for example, these prices rose 

7.0 percent from November 2007 to November 

2008. In the next 12 months, however, grocery 

store food prices turned down, falling 2.9 percent, its sharpest annual drop since June 1959.

All items less food and energy

The index for all items less food and energy fell 

at a 0.2-percent annual rate in the first quarter 

of 2010, the first quarterly decrease since September 1960. The decrease in the first quarter of 

2010 was due primarily to a 2.2-percent annual 

rate of decline in shelter costs. Within shelter, 

owners’ equivalent rent fell at a 0.8-percent rate, 

and lodging away from home declined at a rate 

of 6.7 percent. In addition, some transportation 

components fell in the first quarter of 2010 after 

increasing in 2009. Airline fares fell at a 10.9 percent rate in the first quarter of 2010 after rising 

4.3 percent in 2009. The index for new vehicles 

also fell in the first quarter of 2010, dropping 

at a 1.2-percent annual rate after increasing 4.9 

percent in 2009. 

The first quarter 2010 decreases within all items 

less food and energy were partially offset by 

increases in other items. Medical care prices were 

up at a rate of 5.7 percent in the first quarter, 

with medical care commodities increasing at a 

7.7-percent pace. Prices for used cars and trucks 

continued to increase in the first quarter of 2010, 

up at an 11.4-percent rate after increasing 9.2 

percent in 2009. Tobacco prices, which had increased 30.1 percent in 2009 due in part to Federal and State tax increases, were up at an annual 

rate of 1.8 percent in the first quarter of 2010.

The rate of inflation for all items less food and 

energy has slowed somewhat in recent years, 

and has increased only 1.1 percent over the 

past 12 months. (See chart 2.) This is the lowest 12-month change in this broad expenditure 

category since an equivalent increase in January 2004, and the annual rate of inflation for this 

index has not been lower since a 0.9-percent 

increase in January 1966. The recent deceleration 

in this so-called “core” rate of inflation can largely 

be attributed to a similar deceleration in shelter 

 C U R R E N T P R I C E T R E N D S
inflation. Shelter prices, which had increased 

at a 3.1-percent average annual rate from 1992 

to 2007, rose only 1.9 percent in 2008, and 

increased only 0.3 percent in 2009. This deceleration for shelter continued into 2010, 

with shelter prices down 2.2 percent in the 

first quarter.

Further information is available from the CPI 

Information and Analysis section, at

cpi_info@bls.gov or (202) 691-7000.

 C U R R E N T P R I C E T R E N D S

Chart 2. 12-month percent change, all items and all items less food 

and energy, January 2008 - March 2010

All items All items less food and energy

-3

-2

-

0

1

1

2

3

4

5

6

Notes

1

 A more detailed list of differences between poverty thresholds and poverty guidelines can be found at http://aspe.hhs.gov/POVERTY/faq.shtml (visited May 6, 2010).

2

 The figure resuting from this adjustment is rounded upward to the next multiple of $50; see http://aspe.hhs.gov/

poverty/09computations.shtml (visited May 6, 2010). 

3

 See http://aspe.hhs.gov/POVERTY/09extension.shtml for more details (visited May 6, 2010).

4

 See http://www.census.gov/hhes/www/poverty/threshld/09prelim.html (visited May 6, 2010). These threshold numbers are also 

subject to rounding.

5

 Price movements described in this text reflect data as released on April 14, 2010. All 12-month and longer percent changes reflect 

not seasonally adjusted data, and all hyperlinks show 12-month unadjusted changes for the last 10 years. Percent changes covering 

less than a year are based on seasonally adjusted annual rates, unless otherwise noted. CPI seasonally adjusted indexes and percent 

changes are subject to annual revision.

6 Energy Information Administration; see http://tonto.eia.doe.gov/dnav/pet/pet_pri_wco_k_w.htm (visited May 6, 2010).

4