Consumer Price Index Summary
FOR TECHNICAL INFORMATION:
Patrick C. Jackman (202) 691-7000 USDL-00-336
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INTERNET ADDRESS: Thursday, November 16, 2000
http://stats.bls.gov/cpihome.htm
CONSUMER PRICE INDEX: OCTOBER 2000
The Consumer Price Index for All Urban Consumers (CPI-U) increased
0.2 percent in October, before seasonal adjustment, to a level of 174.0
(1982-84=100), the Bureau of Labor Statistics of the U.S. Department of
Labor reported today. For the 12-month period ended in October, the CPI-U
increased 3.4 percent.
The Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W) rose 0.1 percent in October, prior to seasonal adjustment. The
October level of 170.6 was 3.4 percent higher than the index in October
1999.
CPI for All Urban Consumers (CPI-U)
On a seasonally adjusted basis, the CPI-U rose 0.2 percent in
October, following a 0.5 percent increase in September. Deceleration in
the energy index--up 0.2 percent in October, following a 3.8 percent rise
in September--was largely responsible for the moderation in the October
CPI-U. In October, the index for petroleum-based energy declined 1.2
percent, while the index for energy services increased 1.5 percent. The
food index, which increased 0.2 percent in September, rose 0.1 percent in
October. Excluding food and energy, the CPI-U rose 0.2 percent, following
a 0.3 percent rise in September. A smaller increase in apparel prices and
a downturn in the tobacco index were principally responsible for the more
moderate advance in October.
Table A. Percent changes in CPI for All Urban Consumers (CPI-U)
Seasonally adjusted Un-
Compound adjusted
Expenditure Changes from preceding month annual rate 12-mos.
Category 2000 3-mos. ended ended
Apr. May June July Aug. Sep. Oct. Oct. '00 Oct. '00
All Items .0 .1 .5 .2 -.1 .5 .2 2.6 3.4
Food and beverages .1 .5 .1 .5 .2 .1 .1 1.9 2.5
Housing .1 .2 .5 .3 .2 .4 .5 4.6 4.1
Apparel -.5 -.2 -.6 -1.0 .2 1.6 .3 8.4 -1.3
Transportation -.7 -.5 1.8 -.3 -1.1 1.0 -.4 -1.8 4.8
Medical care .3 .3 .4 .3 .4 .4 .3 4.5 4.3
Recreation .0 .3 .3 .3 .1 .1 .0 .8 2.0
Education and
communication .0 .1 -.1 .6 .2 -.7 .8 1.2 1.5
Other goods and
services 1.4 -.6 -.2 1.0 -.3 1.1 -.6 1.0 3.7
Special Indexes
Energy -1.9 -1.9 5.6 .1 -2.9 3.8 .2 3.8 15.9
Food .1 .5 .1 .5 .2 .2 .1 2.2 2.4
All Items less
food and energy .2 .2 .2 .2 .2 .3 .2 2.4 2.5
See page 4 for a note on the use of hedonic models to adjust prices of
selected products in the CPI for changes in quality.
During the first 10 months of 2000, the CPI-U rose at a 3.6 percent
seasonally adjusted annual rate (SAAR). This compares with an increase of
2.7 percent for all of 1999. The energy index, which increased 13.4
percent in 1999, has risen at a 16.6 percent SAAR thus far in 2000. In
the first 10 months of 2000, petroleum-based energy costs increased at a
20.7 percent SAAR, and charges for energy services rose at a 12.5 percent
annual rate. The food index has risen at a 2.6 percent SAAR thus far in
2000, following a 1.9 percent increase for all of 1999. Excluding food
and energy, the CPI-U has advanced at a 2.7 percent rate thus far in 2000,
compared with a 1.9 percent rise for all of 1999.
The food and beverages index increased 0.1 percent in October, the
same as in September. The index for food at home also increased 0.1
percent for the second consecutive month. Among the six major food-at-
home groups, the index for cereal and bakery products registered the
largest advance--up 0.9 percent in October. A sharp increase in flour
prices also contributed to an increase in prices for most bakery products.
The index for fruits and vegetables rose 0.5 percent in October. Within
the fruits and vegetables group, the index for fresh fruits rose 3.0
percent, more than offsetting a 2.1 percent decline in the index for fresh
vegetables. The index for processed fruits and vegetables increased 0.7
percent. The index for dairy products rose 0.2 percent. The index for
meats, poultry, fish, and eggs was unchanged in October. Meat prices
declined for the second consecutive month; the indexes for beef and for
other meats declined 1.1 and 0.3 percent, respectively, while the index
for pork rose 0.2 percent. The indexes for poultry and for eggs each
increased in October--up 0.7 and 4.7 percent, respectively. Egg prices
have risen 13.6 percent during the past 12 months. In October, the
indexes for nonalcoholic beverages and for other food at home decreased
0.5 and 0.6 percent, respectively. The other two components of the food
and beverages index--food away from home and alcoholic beverages--each
increased 0.2 percent in October.
The housing index increased 0.5 percent in October. The index for
fuels and utilities, which rose 2.0 percent in September, advanced 1.3
percent in October. The index for fuel oil increased 1.3 percent in
October and has advanced 36.8 percent over the past ten months. The index
for natural gas rose 5.1 percent in October and has risen 31.7 percent
thus far in 2000. The index for electricity declined 0.1 percent in
October, but has increased 1.9 percent in the first ten months of the
year. Shelter costs increased 0.4 percent in October, following a 0.2
percent rise in September. Within shelter, the index for rent rose 0.4
percent; owners' equivalent rent increased 0.3 percent; and the index for
lodging away from home advanced 0.6 percent. The index for household
furnishings and operations was unchanged in October.
The transportation component, which increased 1.0 percent in
September, turned back down in October, declining 0.4 percent. Gasoline
prices declined 1.4 percent in October after increasing 5.4 percent in
September. Despite the October decline, gasoline prices have risen 18.7
percent since December. The index for new vehicles declined for the third
consecutive month, down 0.4 percent in October. (Prior to seasonal
adjustment, new vehicle prices rose 0.1 percent. As of October, about 27
percent of the new vehicle sample was represented by 2001 models. The
2001 models will continue to be phased in, with appropriate adjustments
for quality change, over the next several months as they replace old
models at dealerships. For a report on quality changes for the 2001
vehicles represented in the Producer Price Index sample, see news release
USDL-00-331, dated November 9, 2000.) The index for used cars and trucks
increased 1.1 percent in October. Public transportation costs decreased
2.3 percent, largely as a result of a 3.5 percent decline in airline
fares. Despite recent declines, airline fares have risen 5.1 percent thus
far in 2000.
The index for apparel rose 0.3 percent in October after advancing 1.6
percent in September. (Prior to seasonal adjustment, apparel prices rose
1.8 percent, reflecting the continued introduction of higher-priced fall-
winter wear.)
Medical care costs rose 0.3 percent in October to a level 4.3 percent
higher than a year ago. In October, the index for medical care
commodities--prescription and nonprescription drugs and medical supplies--
rose 0.2 percent. The index for medical care services rose 0.3 percent.
Charges for professional services and for hospital and related services
increased 0.2 and 0.4 percent, respectively.
The index for recreation costs was unchanged in October, following
increases of 0.1 percent in each of the preceding two months. Price
declines for video and audio equipment offset small price increases for
most other recreation categories.
The index for education and communication increased 0.8 percent in
October, following a 0.7 percent decline in September. Educational costs
rose 0.5 percent. The index for tuition, other school fees, and child
care increased 0.6 percent. The index for communication, which declined
1.7 percent in September, increased 1.1 percent in October. Within the
index for communication, the indexes for telephone services rose 1.3
percent, while the index for personal computers and peripheral equipment
fell 1.5 percent.
The index for other goods and services, which increased 1.1 percent
in September, declined 0.6 percent in October. Cigarette prices, which
increased 3.8 percent in September, fell 2.8 percent in October,
accounting for the downturn in this major group.
CPI for Urban Wage Earners and Clerical Workers (CPI-W)
On a seasonally adjusted basis, the CPI for Urban Wage Earners and
Clerical Workers rose 0.1 percent in October.
Table B. Percent changes in CPI for Urban Wage Earners and Clerical
Workers (CPI-W)
Seasonally adjusted Un-
Compound adjusted
Expenditure Changes from preceding month annual rate 12-mos.
Category 2000 3-mos. ended ended
Apr. May June July Aug. Sep. Oct. Oct. '00 Oct. '00
All Items .0 .1 .6 .2 -.2 .6 .1 2.1 3.4
Food and beverages .1 .5 .1 .5 .2 .2 .1 1.9 2.6
Housing .2 .2 .5 .4 .1 .5 .4 4.2 4.0
Apparel -.5 -.2 -.5 -1.2 .1 1.4 .4 7.8 -1.4
Transportation -.8 -.5 2.0 -.5 -1.3 1.3 -.3 -1.3 5.0
Medical care .4 .3 .4 .3 .4 .4 .3 4.2 4.3
Recreation .0 .4 .3 .1 .1 .1 .0 .8 1.7
Education and
communication .0 .2 -.3 .6 .2 -.7 .9 1.6 1.4
Other goods and
services 1.8 -1.0 -.3 1.2 -.4 1.5 -1.0 .4 3.8
Special Indexes
Energy -2.4 -1.9 6.2 -.5 -3.4 4.2 .0 2.9 16.1
Food .1 .5 .1 .5 .2 .2 .1 2.2 2.5
All Items less
food and energy .2 .2 .1 .2 .2 .3 .1 2.3 2.3
Consumer Price Index data for November are scheduled for release on
Friday, December 15, 2000, at 8:30 A.M. (EST).
On September 28, The Bureau of Labor Statistics issued corrected Consumer
Price Index data for the period from January to August 2000. All of the
data in this release incorporate these corrections. For details, see
"Revisions in January to August 2000 CPI Data" on the BLS website
(http://stats.bls.gov/cpihome.htm) or contact (202) 691-7000.
__________________________________________________________________________
Extending the use of hedonic models to
adjust prices for changes in quality
The Bureau of Labor Statistics (BLS) is continuing to expand the use in
the Consumer Price Index (CPI) of quality adjustments derived from hedonic
models. As first announced at the time of the July 2000 CPI release,
effective with the CPI for October 2000, BLS has incorporated hedonic
quality adjustment to Washing machines and Clothes dryers. These items
are both part of the Major appliances stratum.
A hedonic model decomposes the price of a consumer product into
implicit prices for each of its important features and components, thereby
providing an estimate of the value of each feature and component. BLS
plans to extend this method to additional items in the CPI. As BLS does
so, it will give CPI users notice at least three months before the first
use of hedonic quality adjustment for each additional item and will make
available detailed papers on the models to be employed.
The relative importance (share of weight), as of December 1999, of the
Major appliances stratum was 0.205 percent in the CPI for all Urban
Consumers (CPI-U) and 0.236 percent in the CPI for Urban Wage Earners and
Clerical Workers (CPI-W). Within Major appliances, Washing machines are
estimated to represent 18 percent of the weight and Clothes dryers about
13 percent.
The hedonic models that BLS analysts developed for Washing machines and
Clothes dryers use observations collected for the CPI, supplemented with
additional observations that the BLS collected specifically for this
purpose. Papers describing this work are in preparation and will be
forthcoming.
Additional work on hedonic quality adjustment is underway at BLS.
For more information on these changes, write to
Bureau of Labor Statistics
Division of Consumer Prices and Price Indexes
2 Massachusetts Ave. NE, Room 3260
Washington, DC 20212
or contact Paul Liegey either by telephone at (202) 691-5394 or by
electronic mail at Liegey_P@bls.gov.
__________________________________________________________________________
Facilities for Sensory Impaired
Information from this release will be made available to
sensory impaired individuals upon request. Voice phone:
202-691-5200, Federal Relay Services: 1-800-877-8339. For
a recorded message of Summary CPI data, call (202) 691-5200.
__________________________________________________________________________
Brief Explanation of the CPI
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 Bureau of Labor Statistics
publishes CPIs for two population groups: (1) a CPI for All
Urban Consumers (CPI-U) which covers approximately 87
percent of the total population and (2) a CPI for Urban Wage
Earners and Clerical Workers (CPI-W) which covers 32 percent
of the total population. The CPI-U includes, in addition to
wage earners and clerical workers, groups such as
professional, managerial, and technical workers, the self-
employed, short-term workers, the unemployed, and retirees
and others not in the labor force.
The CPI is based on prices of food, clothing, shelter,
and fuels, transportation fares, charges for doctors' and
dentists' services, drugs, and other goods and services that
people buy for day-to-day living. Prices are collected in
87 urban areas across the country from about 50,000 housing
units and approximately 23,000 retail establishments-
department stores, supermarkets, hospitals, filling
stations, and other types of stores and service
establishments. All taxes directly associated with the
purchase and use of items are included in the index. Prices
of fuels and a few other items are obtained every month in
all 87 locations. Prices of most other commodities and
services are collected every month in the three largest
geographic areas and every other month in other areas.
Prices of most goods and services are obtained by personal
visits or telephone calls of the Bureau's trained
representatives.
In calculating the index, price changes for the various
items in each location are averaged together with weights
which represent their importance in the spending of the
appropriate population group. Local data are then combined
to obtain a U.S. city average. Separate indexes are also
published by size of city, by region of the country, for
cross-classifications of regions and population-size
classes, and for 26 local areas. Area indexes do not
measure differences in the level of prices among cities,
they only measure the average change in prices for each area
since the base period.
The index measures price change from a designed
reference date-1982-84 which equals 100.0. An increase of
16.5 percent, for example, is shown as 116.5. This change
can also be expressed in dollars as follows: the price of a
base period market basket of goods and services in the CPI
has risen from $10 in 1982-84 to $11.65.
For further details visit the CPI home page on the
Internet at http://stats.bls.gov/cpihome.htm or contact our
CPI Information and Analysis Section on (202) 691-7000.
__________________________________________________________________________
Calculating Index Changes
Movements of the indexes from one month to another are
usually expressed as percent changes rather than changes in index
points, because index point changes are affected by the level of
the index in relation to its base period while percent changes are
not. The example below illustrates the computation of index point
and percent changes.
Percent changes for 3-month and 6-month periods are expressed
as annual rates and are computed according to the standard formula
for compound growth rates. These data indicate what the percent
change would be if the current rate were maintained for a 12-month
period.
Index Point Change
CPI 115.7
Less previous index 111.2
Equals index point change 4.5
Percent Change
Index point difference 4.5
Divided by the previous index 111.2
Equals 0.040
Results multiplied by one hundred 0.040x100
Equals percent change 4.0
_________________________________________________________________________
A Note on Seasonally Adjusted and Unadjusted Data
Because price data are used for different purposes by
different groups, the Bureau of Labor Statistics publishes
seasonally adjusted as well as unadjusted changes each
month.
For analyzing general price trends in the economy,
seasonally adjusted changes are usually preferred since they
eliminate the effect of changes that normally occur at the
same time and in about the same magnitude every year--such
as price movements resulting from changing climatic
conditions, production cycles, model changeovers, holidays,
and sales.
The unadjusted data are of primary interest to
consumers concerned about the prices they actually pay.
Unadjusted data also are used extensively for escalation
purposes. Many collective bargaining contract agreements
and pension plans, for example, tie compensation changes to
the Consumer Price Index unadjusted for seasonal variation.
Seasonal factors used in computing the seasonally
adjusted indexes are derived by the X-12-ARIMA Seasonal
Adjustment Method. The updated seasonal data at the end of
1977 replaced data from 1967 through 1977. Subsequent
annual updates have replaced 5 years of seasonal data, e.g.,
data from 1995 through 1999 were replaced at the end of
1999. The seasonal movement of all items and 54 other
aggregations is derived by combining the seasonal movement
of 73 selected components. Each year the seasonal status of
every series is reevaluated based upon certain statistical
criteria. If any of the 73 components change their seasonal
adjustment status from seasonally adjusted to not seasonally
adjusted, not seasonally adjusted data will be used for the
last 5 years, but the seasonally adjusted indexes will be
used before that period.
Seasonally adjusted data, including the All items index
levels, are subject to revision for up to five years after
their original release. For this reason, BLS advises
against the use of these data in escalation agreements.
Effective with the calculation of the seasonal factors
for 1990, the Bureau of Labor Statistics has used an
enhanced seasonal adjustment procedure called Intervention
Analysis Seasonal Adjustment for some CPI series.
Intervention Analysis Seasonal Adjustment allows for better
estimates of seasonally adjusted data. Extreme values
and/or sharp movements which might distort the seasonal
pattern are estimated and removed from the data prior to
calculation of seasonal factors. Beginning with the
calculation of seasonal factors for 1996, X-12-ARIMA
software was used for Intervention Analysis Seasonal
Adjustment.
For the fuel oil and the motor fuels indexes, this
procedure was used to offset the effects that extreme price
volatility would otherwise have had on the estimates of
seasonally adjusted data for those series. For the
breakfast cereal index, the procedure was used to offset the
effects of price-cutting among cereal manufacturers. For
the educational books and supplies index, the procedure was
used to account for greater than normal sale prices on
educational reference books. For some alcoholic beverage
series, Intervention Analysis Seasonal Adjustment was used
to offset the effects of increased brewer's costs along with
increased demand for specialty beers. For the nonalcoholic
beverages index, the procedure was used to offset the
effects of a large increase in coffee prices due to adverse
weather. For the fats and oils series, the procedure was
used to account for lower domestic butter stocks, lower cold
storage supplies, and anticipation of a bumper soybean crop.
For the new trucks index, the procedure was applied to
account for loyalty rebates offered to customers by American
automakers. For the water and sewerage maintenance index,
the procedure was used to account for a data collection anomaly.
A description of Intervention Analysis Seasonal
Adjustment, as well as a list of unusual events modeled and
seasonal factors for these items may be obtained by writing
the Bureau of Labor Statistics, Division of Consumer Prices
and Price Indexes, Washington, DC 20212 or by calling Claire
McAnaw Gallagher on (202) 691-6968 or sending e-mail to
Gallagher_C@BLS.GOV.
Bureau of Labor Statistics
mailto:gibson_s@bls.gov
Last modified:
Thursday, November 16, 2000
URL: /news.release/cpi.nr0.htm
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Consumer Price Index