March 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 March to a level of 160.0 (1982- 84=100), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. For the 12-month period ended in March, the CPI-U increased 2.8 percent.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) rose 0.1 percent in March, prior to seasonal adjustment. The March 1997 CPI-W level of 157.0 was 2.7 percent higher than the index in March 1996.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U rose 0.1 percent in March, following an increase of 0.3 percent in February. The food index, which advanced 0.3 percent in February, was unchanged in March. Grocery store food prices decreased 0.2 percent, reflecting declines in the indexes for meats, poultry, fish and eggs, and for dairy products. The energy index registered its first decrease since August, declining 1.7 percent. The index for petroleum-based energy fell 2.2 percent, and the index for energy services declined 1.3 percent. Excluding food and energy, the CPI- U rose 0.2 percent, the same as in February. Airline fares increased 4.5 percent in March, following declines of 3.2 and 2.6 percent in January and February, respectively. This advance was essentially offset by a downturn in the index for apparel and upkeep and a smaller increase in shelter costs.

For the first three months of 1997, the CPI-U advanced at a 1.8 percent seasonally adjusted annual rate (SAAR). This compares with an increase of 3.3 percent in all of 1996. Changes in the food and energy components, which had accelerated in 1996 after acting as moderating influences throughout most of the preceding five years, were largely responsible for the deceleration thus far in 1997. Grocery store food prices declined at a 1.3 percent SAAR in the first three months, reflecting price decreases for meats and dairy products, groups which had risen substantially in 1996. The energy index, which increased 8.6 percent in 1996, declined at a 2.8 percent SAAR in the first quarter of 1997. Petroleum-based energy costs decreased at a 8.0 percent SAAR, while charges for energy services increased at a 3.3 percent annual rate.

The CPI-U excluding food and energy advanced at a 2.4 percent SAAR in the first three months of 1997, about the same rate as the 2.6 percent rise for all of 1996. The rates for selected groups during the past eight and 1/4 years are shown below.

SAAR Percent change 12 months 3 ended in December months ended in March 1989 1990 1991 1992 1993 1994 1995 1996 1997

The food and beverage index was unchanged in March. The index for grocery store food prices, which increased 0.5 percent in February, fell 0.2 percent in March. The downturn in March reflects declines in the indexes for meats, poultry, fish, and eggs and for dairy products, coupled with a sharp deceleration in the index for fruits and vegetables. The index for meats, poultry, fish, and eggs declined for the third consecutive month--down 0.9 percent in March. Price declines were registered for beef, pork, poultry, and eggs; prices for fish and seafood increased 1.3 percent. The 0.1 percent decrease in the index for dairy products was the fifth consecutive month that this component did not increase. During the last five months, the index for dairy products fell 2.1 percent after registering increases totaling 8.5 percent in the preceding five-month period. The index for fruits and vegetables, which increased 3.0 percent in February, rose 0.1 percent in March. The index for fresh vegetable prices, which increased 8.9 percent in February, declined 1.8 in March. The index for fresh fruits increased 1.4 percent. The indexes for cereal and bakery products and for other food at home rose 0.3 and 0.1 percent, respectively. The other two components of the food and beverage index-- restaurant meals and alcoholic beverages-- increased 0.3 percent and declined 0.1 percent, respectively.

The housing component, which rose 0.3 percent in February, was unchanged in March. Each of the three major housing groups--shelter, fuel and other utilities, and household furnishings and operations--contributed to the moderation. Shelter costs increased 0.2 percent, following a 0.3 percent rise in February. In March, within shelter, renters' costs rose 0.3 percent; homeowners' costs, 0.2 percent; and maintenance and repair costs, 0.1 percent. The index for fuel and other utilities turned down in March, declining 0.8 percent after increasing 0.3 percent in February. The index for household fuels fell 1.5 percent, reflecting a sharp declines in prices for fuel oil and natural gas--down 3.6 and 4.2 percent, respectively. Prior to the March decline, charges for natural gas had increased 17.3 percent in the preceding 11-month period. Charges for electricity rose 0.2 percent in March. The index for household furnishings and operation, which increased 0.2 percent in February, was unchanged in March.

The transportation component, which declined in each of the first two months of 1997, rose 0.1 percent in March. Public transportation costs rose 2.2 percent in March. The index for airline fares, which fell 3.2 percent in January and 2.6 percent in February, rose 4.5 percent in March, reflecting, in part, the reimposition of the 10 percent federal tax on airline fares effective March 7. The index for gasoline, which was unchanged in February, declined 2.1 percent in March. As of March, the index for gasoline prices was 7.3 percent below its peak level of December 1990. New vehicle purchase costs advanced somewhat more in March than in recent months; the index for new vehicle prices rose 0.1 percent, and automobile finance charges increased 1.2 percent. The index for used cars increased 1.2 percent in March. (Prior to seasonal adjustment, used car prices were unchanged.)

The index for apparel and upkeep turned down in March, declining 0.3 percent after registering increases in each of the six preceding months. (Prior to seasonal adjustment, clothing prices rose 2.2 percent in March, reflecting the continued introduction of higher-priced spring-summer wear.)

Medical care costs rose 0.4 percent in March to a level 3.0 percent above a year ago. The index for medical care commodities--prescription drugs, nonprescription drugs, and medical supplies--increased 0.5 percent. The index for medical care services rose 0.3 percent. Charges for professional services and hospital and related services increased 0.5 and 0.2 percent, respectively.

Entertainment costs rose 0.2 percent in March, the same as in February. Increases in the indexes for club memberships and for fees for participant sports--up 0.7 and 1.1 percent, respectively--were largely responsible for the March advance.

The index for other goods and services rose 0.5 percent in March, principally as a result of increases in the indexes for tobacco and smoking products and for personal expenses, in particular personal financial services.

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 March.

After seasonal adjustment, the level of the CPI-U for All Items was 159.9 in March; the seasonally adjusted CPI-W for All Items was 157.0.

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 April are scheduled for release on Thursday, May 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. Over-the-month percent changes in the U.S. City Average Consumer Price Index for All Urban Consumers (CPI-U) for All Items and for All Items less food and energy, seasonally adjusted, using former and recalculated seasonal factors for 1996.

All Items

1996 Former Recalculated Differen ce

All Items less food and energy

1996 Former Recalculated Differen ce