February 1997 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) increased 0.3 percent before seasonal adjustment in February to a level of 159.6 (1982- 84=100), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. For the 12-month period ended in February, the CPI-U increased 3.0 percent.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) also rose 0.3 percent in February, prior to seasonal adjustment. The February 1997 CPI-W level of 156.8 was 3.0 percent higher than the index in February 1996.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U rose 0.3 percent in February, following an increase of 0.1 percent in January. The food index, which declined 0.3 percent in January, advanced 0.3 percent in February. The index for grocery store food prices increased 0.5 percent, reflecting an 8.9 percent rise in the index for fresh vegetables. The energy index--up 0.3 percent in February--continued to increase, but by less than in recent months. The index for petroleum-based energy turned down in February, declining 0.2 percent, while the index for energy services rose 0.7 percent. Excluding food and energy, the CPI-U rose 0.2 percent. This compares with a 0.1 percent rise in January, but was the same as the average monthly increase in all of 1996.

The food and beverage index increased 0.3 percent in February. The index for grocery store food prices, which fell 0.6 percent in January, increased 0.5 percent in February. The February food advance reflects a sharp upturn in the index for fruits and vegetables, which rose 3.0 percent after declining 2.0 percent in January. The index for fresh vegetables increased 8.9 percent as a result of a late January freeze in the Southeastern part of the country. The index for fresh fruits increased 1.3 percent, while the index for processed fruits and vegetables declined slightly. (Prior to seasonal adjustment, fresh fruit prices fell 3.2 percent.) The index for meats, poultry, fish, and eggs declined for the second consecutive month--down 0.2 percent in February. In this group, prior to seasonal adjustment, price declines were registered for beef, pork, poultry, fish and seafood, and eggs. The 1.1 percent decrease in the index for dairy products was the fourth consecutive month in which the index failed to advance after increases totaling 8.5 percent in the preceding five-month period. The indexes for cereal and bakery products and for other food at home increased 0.1 and 0.2 percent, respectively. The other two components of the food and beverage index--restaurant meals and alcoholic beverages--each increased 0.2 percent.

The housing component rose 0.3 percent in February. Shelter costs also increased 0.3 percent. Within shelter, renters' costs and homeowners' costs each rose 0.3 percent, and maintenance and repair costs increased 0.6 percent. The rise in renters' costs reflected a 0.9 percent increase in the index for other renters' costs; residential rents rose 0.1 percent. The index for fuel and other utilities rose 0.3 percent in February. The index for household fuels increased 0.5 percent, as a 1.6 percent decline in fuel oil prices partially offset increases in charges for natural gas and electricity of 1.2 and 0.5 percent, respectively. For the 12-month period ended in February, charges for natural gas have increased 14.4 percent. In February, the index for other utilities and public services was unchanged. The index for household furnishings and operation, which declined 0.2 percent in January, increased 0.2 percent in February, reflecting a return to regular prices after widespread sales in January.

The transportation component, which declined 0.2 percent in January, fell 0.1 percent in February. Public transportation costs fell sharply for the second consecutive month. The index for airline fares, which increased 2.3 percent in December, fell 3.2 percent in January and 2.6 percent in February. The declines in early 1997 reflect, in part, the lapse of the 10 percent federal tax on airline fares on January 1; the tax was reimposed effective March 7. The index for gasoline, which had advanced 6.6 percent in the preceding four months, was unchanged in February. (Prior to seasonal adjustment, gasoline prices declined 0.5 percent in February.) The index for gasoline prices has risen 13.3 percent in the last 14 months, and as of February was 5.4 percent below its peak level of December 1990. New vehicle purchase costs continued to show little change in February; the index for new vehicle prices was unchanged, while automobile finance charges increased 0.2 percent. The index for used cars increased 0.5 percent in February. (Prior to seasonal adjustment, used car prices fell 0.2 percent.)

The index for apparel and upkeep increased for the sixth consecutive month in February--up 0.2 percent. (Prior to seasonal adjustment, clothing prices rose 1.9 percent in February, reflecting the introduction of higher- priced spring-summer wear.)

Medical care costs rose 0.2 percent in February to a level 2.9 percent above a year ago. The index for medical care commodities--prescription drugs, nonprescription drugs, and medical supplies--increased 0.3 percent. The index for medical care services rose 0.2 percent. Charges for professional services and hospital and related services each increased 0.1 percent.

Entertainment costs, which were unchanged on average in January, rose 0.2 percent in February, principally as a result of a 0.8 percent increase in the index for admissions to movies, theaters, concerts, and sporting events.

The index for other goods and services rose 0.5 percent in February. Increases in the indexes for tobacco and smoking products and for personal expenses-up 0.6 and 0.8 percent, respectively-were largely responsible for the February rise 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 0.2 percent in February.

After seasonal adjustment, the level of the CPI-U for All Items was 159.8 in February; the seasonally adjusted CPI-W for All Items was 156.9.

Beginning with January 1997 data, BLS is reporting the level of the seasonally adjusted U.S. City Average All Items CPI-U and CPI-W in this monthly news release. Effective with the release of January 1998 data in February 1998, the seasonally adjusted All Items indexes will be fully integrated into the releases, appearing in tables 2 and 5 and in the text where relevant.

Like other seasonally adjusted CPI data, 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.

Consumer Price Index data for March are scheduled for release on Tuesday, April 15, 1997, at 8:30 A.M. (EDT). 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-11-ARIMA Seasonal Adjustment Method (1988). 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 1992 through 1996 were replaced at the end of 1996. The seasonal movement of all items and 47 other aggregations is derived by combining the seasonal movement of 60 selected components. Each year the seasonal status of every series is reevaluated based upon certain statistical criteria. If any of the 60 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.

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 some women's apparel indexes and the girls' apparel index, the procedure was used to offset the effects of changes in pricing methodology. For the tobacco and smoking products index, this procedure was used to offset the effects of increases in excise taxes and wholesale tobacco prices. For some alcoholic beverage series, Intervention Analysis Seasonal Adjustment was used to offset the effects of excise tax increases. 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 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) 606-6968.