September 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) rose 0.2 percent before seasonal adjustment in September to a level of 161.2 (1982- 84=100), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. For the 12-month period ended in September, the CPI-U increased 2.2 percent.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) rose 0.3 percent in September, prior to seasonal adjustment. The September 1997 CPI-W level of 158.3 was 2.1 percent higher than the index in September 1996.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U rose 0.2 percent in September, the same as in each of the preceding two months. The food index increased 0.1 percent in September. Grocery store food prices, which rose 0.6 percent in August, declined 0.1 percent in September, reflecting decreases in the indexes for fruits and vegetables and for meats, poultry, fish, and eggs. The energy index, which increased 1.7 percent in August, rose 1.3 percent in September. The index for petroleum- based energy rose 1.5 percent and the index for energy services, 1.1 percent. Excluding food and energy, the CPI-U rose 0.2 percent, following an increase of 0.1 percent in August. The larger advance in September reflects an upturn in the indexes for apparel and upkeep and for airline fares.

See page 5 for a note on the future use of a hedonic model to adjust personal computer prices in the CPI for changes in quality.

Consumer prices rose at a seasonally adjusted annual rate (SAAR) of 2.5 percent in the third quarter. This follows increases of 1.8 and 1.0 percent at annual rates in the first and second quarters, respectively, and brings the year-to-date annual rate to 1.8 percent. This compares with an increase of 3.3 percent for all of 1996. 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. The food index has risen at a 1.7 percent SAAR thus far in 1997, following a 4.3 percent increase in 1996. All major grocery store food categories have shown marked deceleration thus far in 1997, relative to 1996, except for the other food at home group. The larger advance in this latter group is entirely due to the sharp acceleration in coffee prices, which have increased at a 33.8 percent annual rate in the first nine months of 1997 after declining 6.7 percent in all of 1996. The energy index, which increased 8.6 percent in 1996, declined at a 2.5 percent SAAR in the first nine months of 1997. The index for petroleum-based energy fell at a 5.1 percent annual rate, while energy services rose at a 0.5 percent SAAR.

Excluding food and energy, the CPI-U advanced at a 1.7 percent SAAR in the third quarter, following increases of 2.4 percent in each of the first two quarters of 1997. The 2.2 percent SAAR in the first nine months of 1997 compares with a 2.6 percent rise for all of 1996. Within this category, both commodities and services have advanced at a somewhat slower rate thus far in 1997 than for all of 1996. The index for commodities less food and energy has advanced at a 0.4 percent rate in 1997 compared with a 1.1 percent rise for all of 1996. The index for services less energy, which increased 3.3 percent in 1996, has risen at a 2.9 percent rate thus far in 1997.

SAAR Percent change 12 months 9 ended in December months ended in Sep. 1989 1990 1991 1992 1993 1994 1995 1996 1997

The food and beverage index rose 0.1 percent in September. The index for grocery store food prices, which rose 0.6 percent in August, declined 0.1 percent in September. The index for fruits and vegetables fell 0.3 percent, following a 2.8 percent increase in August. The indexes for fresh vegetables and for processed fruits and vegetables declined 0.9 and 0.3 percent, respectively, more than offsetting a 0.2 percent increase in the index for fresh fruits. The index for meats, poultry, fish, and eggs also turned down in September, declining 0.2 percent. Within this group, the index for pork fell 0.4 percent, the index for beef was unchanged, and poultry prices rose 0.8 percent. The indexes for dairy products and for cereal and bakery products each rose at the same rate in September as in August--up 0.1 and 0.2 percent, respectively. The index for other food at home increased 0.2 percent in September. An upturn in prices for sugar and sweets was partially offset by a down-turn in coffee prices, which fell 0.5 percent, following increases totaling 24.2 percent in the preceding six months. The other two components of the food and beverage index--restaurant meals and alcoholic beverages--increased 0.3 and 0.2 percent, respectively.

The housing component rose 0.3 percent in September, after increasing 0.1 percent in August. Shelter costs rose 0.2 percent. Within shelter, renters' costs increased 0.4 percent and homeowners' costs, 0.1 percent. The index for fuel and other utilities, which declined 0.5 percent in August, rose 0.6 percent in September. The index for household fuels increased 1.0 percent, largely as a result of a 2.2 percent rise in the index for natural gas. Charges for electricity increased 0.5 percent, while fuel oil prices fell 0.1 percent. The index for other utilities and public services, which declined 0.2 percent in August, rose 0.3 percent in September, in part reflecting a 0.6 percent rise in cable television charges. The index for household furnishings and operation advanced 0.1 percent, its first increase since May.

The transportation component advanced 0.4 percent in September, following an increase of 0.6 percent in August. The index for gasoline, which increased 5.4 percent in August after declining in each of the preceding five months, continued to advance in September, rising 1.8 percent. New vehicle purchase costs continued to show little upward movement; the index for new vehicle prices increased 0.1 percent, while automobile finance charges dropped 1.3 percent. (Prior to seasonal adjustment, new vehicle prices declined 0.2 percent.) The index for used cars declined 0.1 percent. Public transportation costs turned back up in September, reflecting the behavior of airline fares. The movement in airline fares continued to vary between large declines and increases, reflecting the prevalence of "super-saver" discount fares. The advance of 2.1 percent in September follows a decline of 4.7 percent in August. During the past 12 months, airline fares have increased 1.0 percent.

The index for apparel and upkeep, which declined 1.0 percent in August, rose 0.3 percent in September. (Prior to seasonal adjustment, apparel commodity prices rose 2.6 percent, reflecting seasonal price increases for fall-winter wear.)

Medical care costs rose 0.2 percent in September to a level 2.6 percent above a year ago. The index for medical care commodities-- prescription drugs, nonprescription drugs, and medical supplies--increased 0.1 percent. The index for medical care services rose 0.2 percent. Charges for professional services and hospital and related services increased 0.1 and 0.4 percent, respectively.

Entertainment costs, which increased 0.2 percent in August, declined 0.2 percent in September. The index for admissions to movies, theaters, concerts, and sporting events declined 1.8 percent in September, following a 1.3 percent rise in August.

The index for other goods and services rose 0.3 percent in September, following an increase of 0.6 percent in August. The indexes for college tuition and for school books and supplies, which increased 0.6 and 0.7 percent, respectively in August, declined 0.9 and 0.1 percent, respectively, in September. (In September, prior to seasonal adjustment, college tuition costs rose 1.8 percent, and the index for school books and supplies increased 0.6 percent.) The index for tobacco and smoking products increased 1.4 percent in September.

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 September.

After seasonal adjustment, the level of the CPI-U for All Items was 161.3 in September; the seasonally adjusted CPI-W for All Items was 158.2.

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 October are scheduled for release on Tuesday, November 18, 1997, at 8:30 A.M. (EST).

Using a hedonic model to adjust prices of personal computers in the Consumer Price Index for changes in quality

Effective with the release of data for January 1998, the Bureau of Labor Statistics (BLS) will introduce an improved quality adjustment technique in the new stratum of the Consumer Price Index (CPI) called Personal Computers and Peripheral Equipment.

Currently, personal computers are part of the Information Processing Equipment stratum. As previously announced, beginning with the CPI for January 1998, Information Processing Equipment will become an expenditure class entitled Information and Information Processing Other Than Telephone Services. Personal Computers and Peripheral Equipment will be one of four strata in that expenditure class.

Analysts in the Producer Price Index (PPI) program have developed and implemented a regression procedure, called a hedonic model, that decomposes the price of personal computers into implicit prices for each important feature and component of the computer. This model, which has been used in the PPI since 1991, provides a way to estimate the value of changes or improvements. The CPI has used similar hedonic methods to adjust apparel prices for many years.

Starting with the CPI for January 1998, when a personal computer or selected item of peripheral equipment, such as a modem, in the CPI sample improves in some way, a regression-based quality adjustment will be made. The value of the improvement, as derived from the PPI regression estimates, will be deducted from the observed price change for the product. (Conversely, if a model deteriorates, the value of the difference will be added to the price.)

Additional information on these changes will be published in the June 1997 CPI Detailed Report and is available on the Internet (at http://stats.bls.gov/cpihome.htm). This information can also be obtained by writing to Bureau of Labor Statistics, Division of Consumer Prices and Price Indexes, Room 3260, 2 Massachusetts Ave. NE, Washington, DC 20212 or by telephoning Joseph Chelena at (202) 606-6982 ext. 255.