October 1994 Consumer Price Index

Historical release narrative reproduced from the official public-domain source. Statistical tables, standard technical appendices, administrative material and attendance rosters are omitted; formatting is adapted for reading. Figures retain the release's historical context and may have been revised. Consult the linked source for the complete document.

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent before seasonal adjustment in October to a level of 149.5 (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 2.6 percent.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 0.1 percent in October, prior to seasonal adjustment. The October 1994 CPI-W level of 147.0 was 2.6 percent higher than the index in October 1993.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U rose 0.1 percent in October. This compares with an increase of 0.2 percent in September and was the smallest monthly advance since a similar rise in April. The food index was unchanged in October after advancing 0.3 percent or more in each of the 5 preceding months. The energy index declined 0.7 percent in October, the same as in September. The CPI-U excluding food and energy increased 0.2 percent in October, the same as in September.

During the first 10 months of 1994, the CPI-U rose at a 2.6 percent seasonally adjusted annual rate (SAAR). This compares with an increase of 2.7 percent in all of 1993. Thus far in 1994, the food index has increased at an annual rate of 2.0 percent and energy costs at a 2.2 percent rate. The year-to-date annual rate for the index for all items less food and energy in 1994 was 2.8 percent. This follows a 3.2 percent increase in all of 1993 and continues the moderating pattern evident in this component since 1990.

The food and beverages index rose 0.1 percent in October. Grocery store food prices, which rose at a 7.2 percent seasonally adjusted annual rate in the third quarter, declined 0.1 percent. Of the five major grocery store food groups, only the index for fruits and vegetables registered an increase in October, advancing 0.4 percent. Increases in the indexes for fresh vegetables and processed fruits and vegetables--up 2.1 and 0.5 percent, respectively--more than offset a 1.3 percent decline in the index for fresh fruits. The index for meats, poultry, fish, and eggs declined 0.3 percent to a level only 0.1 percent higher than a year ago. Meat prices rose 0.1 percent, but were more than offset by declines in prices for poultry, eggs, and fish and seafood. A 0.2 percent decline in the pork index was more than offset by increases in prices for beef and other meats--up 0.1 and 0.5 percent, respectively. Poultry prices fell 1.3 percent after increasing 1.1 percent in September. The index for cereal and bakery products declined 0.1 percent, while the index for dairy products was unchanged. The index for other food at home, which had increased 5.3 percent in the third quarter, largely due to the run-up in coffee prices, fell 0.3 percent in October. Coffee prices, which had risen 22.4 and 22.0 percent in July and August, respectively, before stabilizing in September, advanced 0.9 percent in October. This increase, however, was more than offset by decreases in prices for carbonated drinks and prepared foods. The other two components of the food and beverages index--restaurant meals and alcoholic beverages--rose 0.1 percent and 0.2 percent, respectively.

The housing component rose 0.1 percent in October, the same as in September. Shelter costs increased 0.2 percent, following a 0.3 percent rise in September. Within shelter, renters' costs and homeowners' costs rose 0.5 and 0.2 percent, respectively, while maintenance and repair costs fell 0.6 percent. The increase in renters' costs reflects a 1.5 percent rise in other renters' costs; residential rents advanced 0.1 percent. The index for fuel and other utilities--down 0.2 percent--declined for the second consecutive month, but by less than in September. The index for household fuels fell 0.4 percent, reflecting declines in the indexes for fuel oil and natural gas--down 2.3 and 1.2 percent, respectively. The index for electricity rose 0.3 percent. (Prior to seasonal adjustment, charges for electricity fell 4.1 percent, reflecting the shift to off-season rates.) The index for other utilities and public services rose 0.1 percent in October, as increases in the indexes for water and sewerage maintenance and for refuse collection were partially offset by small declines in the indexes for telephone services and for cable television. The index for household furnishings and operation was unchanged in October, following a decrease of 0.1 percent in September.

The transportation index, which increased slightly in September, decreased 0.2 percent in October, reflecting larger declines than in September in the indexes for both motor fuels and for public transportation costs. The index for gasoline declined 1.1 percent in October, following a 0.6 percent drop in September, and is now 14.8 percent lower than its peak level recorded in December 1990. The index for public transportation, which declined 0.7 percent in September, fell 2.1 percent in October, reflecting a 2.6 percent decrease in airline fares. Automobile purchase costs decelerated in October. The index for new vehicles, which rose 0.5 percent in September, was unchanged in October. (Prior to seasonal adjustment, prices for new vehicles rose 0.7 percent. As of October, the proportion of 1995 models in the index was about one- third of the new car sample. They will continue to be phased in over the next several months as new models replace the old at dealerships. For a report on quality changes for the 1995 cars, see news release USDL-94-553, dated November 10, 1994.) Automobile finance charges continued to increase, but by less than in September, advancing 1.0 percent in October and 16.8 percent thus far in 1994. The index for used cars rose 1.4 percent.

The index for apparel and upkeep declined for the fourth consecutive month, down 0.5 percent in October. (Prior to seasonal adjustment, clothing prices rose 0.8 percent.) Price increases associated with the introduction of fall-winter wear in 1994 have been smaller than in recent years.

Medical care costs rose 0.6 percent in October, following increases of 0.4 percent in each of the 5 preceding months, and are 4.7 percent higher than a year earlier. The index for medical care commodities--prescription drugs, nonprescription drugs, and medical supplies--rose 0.4 percent in October. The index for medical care services rose 0.6 percent. Charges for professional services and hospital and related services increased 0.6 and 0.3 percent, respectively.

The entertainment index increased 0.1 percent in October, the same as in September. A 1.7 percent increase in the October index for fees for participant sports, reflecting a return to regular prices after substantial discounting in the 2 preceding months, offset price declines in the indexes for reading materials and for admissions to movies, theaters, concerts, and sporting events.

The index for other goods and services rose 0.4 percent in October after advancing 0.1 percent in September. Increases in the indexes for tobacco and smoking products and for personal expenses- -up 0.8 and 0.7 percent, respectively--accounted for over three- fourths of the October rise in the other goods and services index.

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.

CPI ANNOUNCEMENT

Effective with the release of data for January 1995, on February 15, the Bureau of Labor Statistics will introduce several technical improvements in the calculation of the Consumer Price Index designed to make the index a more accurate measure of price change. These improvements, which stem from findings of research conducted by BLS staff, will affect the food at home, shelter, and prescription drug components of the CPI.

The change to the food at home component improves the outlet sample rotation process. (Approximately 20 percent of CPI outlet samples are updated annually.) Empirical evidence has established that current procedures for the routine introduction of new samples tend to overstate price change for the newly sampled items immediately following their introduction. Since the food at home component of the index is particularly sensitive to this effect, new measures designed to lessen its impact will be used in the calculation of the food at home component beginning with January 1995 data.

In addition, two changes are being made in the way in which the shelter component of the CPI is calculated. First, the imputation formula for estimating owners' equivalent rent, which relies upon a matching of a sample of residential rental units to a sample of homeowner units, will be improved. Second, additional BLS research has indicated that current procedures, both for residential rent and for owners' implicit rent, tend to understate the short-term rent change. Beginning with data for January 1995, BLS will incorporate an improved estimate. Research on this issue will continue during the course of the upcoming CPI revision, and, if this research yields further improvements in the estimates of rent changes, they will be incorporated into the index as part of the revision effort.

Finally, the procedure for handling the introduction into the index of generic versions of formerly patented drugs into the index will be changed. The current practice of directly comparing the prices of patented and generic drugs only when the patented drug is no longer available in the sampled outlet will be changed. A new procedure, which will reflect the rate at which consumers switch their purchases from patented to generic versions of a drug, will be employed beginning with CPI data for January 1995.

The basic research papers on these topics are available from the BLS by calling 202-606-7000. These changes will be explained more fully in the CPI Detailed Report for October 1994.