November 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 November to a level of 149.7 (1982-84=100), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. For the 12-month period ended in November, the CPI-U increased 2.7 percent.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 0.2 percent in November, prior to seasonal adjustment. The November 1994 CPI-W level of 147.3 was 2.7 percent higher than the index in November 1993.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U rose 0.3 percent in November, following an increase of 0.1 percent in October. The larger advance in November was primarily the result of an upturn in the energy index, which rose 0.7 percent after declining 0.7 percent in each of the 2 preceding months. The food index also contributed to the larger advance in the overall CPI-U, increasing 0.2 percent in November after registering no change in October. The CPI-U excluding food and energy increased 0.2 percent in November, the same as in each of the 2 preceding months.

During the first 11 months of 1994, the CPI-U rose at a 2.7 percent seasonally adjusted annual rate (SAAR), the same as the increase for all of 1993. The food index has increased at a annual rate of 2.1 percent and energy costs at a 2.8 percent rate. The year-to-date annual rate for the index for all items less food and energy thus far 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 beverage index rose 0.2 percent in November. Grocery store food prices, which declined 0.1 percent in October, increased 0.1 percent in November. The indexes for meats, poultry, fish, and eggs and for other food at home, which fell in October, increased 0.1 and 0.3 percent, respectively, in November and accounted for the upturn in the grocery store food index. Price declines for beef and poultry were more than offset by increases in the indexes for pork, eggs, and fish and seafood. The indexes for dairy products and for fruits and vegetables also registered small increases in November, advancing 0.2 and 0.3 percent, respectively. A substantial rise in fresh vegetable prices was largely offset by a decline in the indexes for processed fruits and vegetables. The index for fresh fruits was unchanged. The index for cereal and bakery products declined for the second consecutive month--down 0.2 percent in November. The other two components of the food and beverage index--restaurant meals and alcoholic beverages--rose 0.3 percent and 0.5 percent, respectively.

The housing component rose 0.3 percent in November, following increases of 0.1 percent in each of the 2 preceding months. Shelter costs, which increased 0.2 percent in October, rose 0.3 percent in November. Within shelter, renters' costs rose 0.3 percent; homeowners' costs, 0.4 percent; and maintenance and repair costs, 0. 3 percent. The index for fuel and other utilities turned up in November, advancing 0.5 percent after registering declines in each of the 2 preceding months. The index for household fuels rose 0.8 percent, reflecting increases in the indexes for each of the three major fuels. The index for fuel oil, which had declined 3.3 percent during the 2 preceding months, increased 0.2 percent in November. The indexes for natural gas and electricity rose 0.8 and 0.9 percent, respectively. (Prior to seasonal adjustment, charges for electricity fell 1.7 percent, reflecting the change to off-season rates in some areas.) The index for other utilities and public services rose 0.1 percent in November, as increases in the indexes for water and sewerage maintenance, refuse collection, and cable television more than offset a 0.1 percent decline in the index for telephone services. The 0.4 percent increase in charges for cable television was its first advance in 8 months. During the 11-month period ended in November, these charges have fallen 3.0 percent. The index for household furnishings and operation fell 0.2 percent as a slight increase in the index for housefurnishings was more than offset by price declines for most housekeeping supplies and services.

The transportation index, which decreased slightly in October, increased 0.1 percent in November, largely as a result of an upturn in the index for motor fuels. The index for gasoline, which had declined in each of the 2 preceding months, rose 0.6 percent in November. Thus far in 1994, gasoline prices have increased 6.3 percent. Despite this advance, gasoline prices are 14.3 percent lower than their peak level in December 1990. Also contributing to the November transportation advance were increases in the indexes for automobile finance charges, automoble insurance, and used cars. Automobile finance charges continued to increase, advancing 1.5 percent in November and 18.5 percent thus far in 1994. Used car prices rose 1.4 percent in November, the same as in October, and have increased 6.7 percent in the past 11 months. The index for automobile insurance costs increased 0.7 percent in November. Partially offsetting the above mentioned increases were decreases in the indexes for public transportation and new vehicles. The index for public transportation declined for the third consecutive month--down 2.1 percent in November--reflecting another drop in airline fares. The index for airline fares fell 4.2 percent in November and have declined 7.7 percent since August. The index for new vehicles, which was unchanged in October, declined 0.3 percent in November. (Prior to seasonal adjustment, prices for new vehicles rose 0.7 percent in both October and November. As of November, the proportion of 1995 models in the index was about 55 percent of the new car sample.)

The index for apparel and upkeep declined for the fifth consecutive month, down 0.2 percent in November. (Prior to seasonal adjustment, clothing prices fell 0.9 percent.)

Medical care costs, which rose 0.6 percent in October, increased 0.3 percent in November and are 4.8 percent higher than a year earlier. The index for medical care commodities--prescription drugs, non-prescription drugs, and medical supplies--rose 0.4 percent in November. The index for medical care services rose 0.3 percent, with charges for professional services and hospital and related services up 0.4 percent and 0.3 percent, respectively.

The entertainment index advanced 0.7 percent in November, following increases of 0.1 percent in each of the 2 preceding months. Substantial increases were recorded in the indexes for sporting goods and equipment and for fees for participant sports.

The index for other goods and services rose 0.4 percent in November, the same as in October. The index for personal expenses- -which includes charges for legal and financial services and funeral expenses--rose 0.5 percent. The index for tobacco and smoking products increased 0.1 percent in November.

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 0.3 percent in November.

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 are explained more fully in the CPI Detailed Report for October 1994.