by Jim Cline and Kate Kremer
The one CPI Report that most heavily influences the course of negotiations is the June CPI Report and it was just released this last week.
The Report shows the All-Cities inflation rate (using the “W” index) was steady from the April report at 2%, while the Seattle rate drifted from 2.6% in April to 2.2%:
While there had been some random indications that the rate of inflation was starting to head upwards, that anticipated trend was not at all apparent from this report. From our recent (July 18) blog we noted that at least one Federal Reserve Bank Report predicted level inflation through the balance of this year and into next, with the rate of inflation picking up in the second half of 2015 due to the pressures of a growing economy. As we said then:
If this projection holds out, 2015 wage proposal for 2 to 2.5% might stay in line with inflation but being locked into such a percentage into 2016 and beyond might not be desirable.
The more recent inflation indicators had reported an increase not only in fuel prices, which have a tendency to go up and down, but also food prices. If an overall increase in food prices continued this would be more likely to spur an acceleration in overall inflation, because it more broadly impacts the general rate of inflation. But the Bureau of Labor Statistics summary issued with the June CPI Report noted that recent trend, but indicated that price increases “decelerated” in June.
While we watch each periodic CPI Report to assess the inflation trend line, the June number is particularly important because it has more influence on the following year’s contract negotiations than other CPI Reports. While CPI is just one (albeit significant) factor driving contract settlements, the June number has more impact than any other month’s numbers because, of those Washington public safety labor contracts which tie their “out year” wage increases to a specific CPI formula, the June report is by far the most frequently chosen month used in formulas.
The Seattle-W and All-Cities-W are also heavily relied upon indices, but contracts rely upon other inflation measures too. Here’s a chart of all the latest CPI numbers used in the region:
We have posted the most recent CPI data, but also historic and other comparison CPI data on our Premium Website: http://clinelawfirm.com/premiumcontent/ For more information on the Premium Website, visit http://clinelawfirm.com/services/premium-information-services.shtml.
In our next blog, we’ll discuss the relative advantages of using the Seattle CPI index versus the All-Cities index in your contract negotiations.
