March 1999 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 0.3 percent in March, before seasonal adjustment, to a level of 165.0 (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 has increased 1.7 percent.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) rose 0.2 percent in March, prior to seasonal adjustment. The March level of 161.4 was 1.7 percent higher than the index in March 1998.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U rose 0.2 percent in March, following increases of 0.1 percent in each of the preceding three months. The food index, which increased 0.1 percent in February, declined 0.2 percent in March. The index for food at home fell 0.5 percent in March, largely as a result of a 2.2 percent decline in the index for fruits and vegetables. The energy index registered its first increase since last October--advancing 1.6 percent in March. The index for petroleum-based energy increased 3.5 percent, and the index for energy services increased 0.3 percent. Excluding food and energy, the CPI-U increased 0.1 percent in March, the same as in each of the first two months of 1999.

For the first three months of 1999, the CPI-U advanced at a 1.5 percent seasonally adjusted annual rate (SAAR). This compares with an increase of 1.6 percent in all of 1998. While the overall rates of change in these two periods were virtually the same, the composition was notably different. The energy index, which decreased 8.8 percent in 1998, increased at a 5.8 percent SAAR in the first three months of 1999. Petroleum-based energy costs rose at a 12.6 percent SAAR, and charges for energy services increased at a 1.0 percent annual rate. The food index increased at a 1.7 percent SAAR thus far in 1999, following a 2.3 percent rise in 1998. Grocery store food prices increased at a 0.5 percent SAAR in the first 3 months, as increases in the indexes for dairy products, for nonalcoholic beverages, and for cereal and bakery products more than offset declines in the indexes for fruits and vegetables, for meats, poultry, fish, and eggs, and for other food at home. The CPI-U excluding food and energy advanced at a 0.9 percent SAAR in the first 3 months of 1999, following a 2.4 percent rise for all of 1998. Smaller increases in the indexes for shelter and for cigarettes coupled with a larger decline in the index for apparel were largely responsible for the deceleration. The rates for selected groups for the last five and one-quarter years are shown below.

The food and beverages index declined 0.2 percent in March. The index for food at home, which rose 0.1 percent in February, decreased 0.5 percent in March. The downturn was largely due to another decrease in the index for fruits and vegetables--down 2.2 percent in March, following a 1.1 percent drop in February. In March, the index for fresh vegetables fell 5.2 percent and the index for fresh fruits declined 0.8 percent. The index for processed fruits and vegetables declined 0.2 percent. Declines in the indexes for dairy products, for meats, poultry, fish, and eggs, and for other food at home also contributed to the March food decrease. The index for dairy products, which increased 9.5 percent in the 7-month period ended in February, declined 0.5 percent in March, reflecting sharp drops in the basic formula support prices. The index for meats, poultry, fish, and eggs, which rose 0.9 percent in February, turned back down in March, declining 0.2 percent. Prices for beef and veal, pork, and fish and seafood each declined in March, while poultry prices rose 0.6 percent, their first increase in five months.. Among the other major grocery store food groups, the indexes for cereal and bakery products and for nonalcoholic beverages rose 0.2 and 0.1 percent, respectively. The other two components of the food and beverage index--food away from home and alcoholic beverages--rose 0.2 percent and declined 0.1 percent, respectively, in March.

The housing component rose 0.2 percent in March. Shelter costs, which increased 0.2 percent in February, advanced 0.3 percent in March. Within shelter, the indexes for rent and for owners' equivalent rent rose 0.2 and 0.1 percent, respectively, while the cost of lodging away from home increased 1.8 percent. (Prior to seasonal adjustment, the cost of lodging while away from home increased 3.6 percent in March and has advanced 10.3 percent in the first three months of 1999.) The index for fuels and utilities rose 0.2 percent in March. The index for household fuels increased 0.3 percent, as increases in the indexes for fuel oil and for electricity more than offset a 0.1 percent decline in the index for natural gas. The indexes for fuel oil and for electricity increased 0.9 and 0.3 percent, respectively. The index for household furnishings and operations declined 0.1 percent in March, reflecting discounting on home furnishings.

The transportation component turned up in March, increasing 0.7 percent after registering declines in each of the preceding four months. A sharp upturn in the index for motor fuels and another advance in airline fares more than offset further declines in the prices for new and used vehicles. The index for gasoline rose 3.7 percent in March, its largest monthly advance since a 4.5 percent rise in August 1997. Despite the March advance, gasoline prices have fallen 5.0 percent over the last 12 months and are 27.8 percent lower than their peak level in November 1990. Public transportation costs increased 3.0 percent in March, reflecting a 4.7 percent rise in airline fares. In the four-month period ended in March, airline fares have risen 10.2 percent. On the other hand, the index for new vehicles fell 0.2 percent and the index for used cars and trucks declined 0.6 percent in March.

The index for apparel declined for the fifth consecutive month, down 0.3 percent in March. (Prior to seasonal adjustment, apparel prices rose 2.3 percent, reflecting further introduction of higher-priced spring- summer wear.)

Medical care costs rose 0.2 percent in March to a level 3.5 percent above a year ago. The index for medical care commodities--prescription drugs, nonprescription drugs, and medical supplies--increased 0.4 percent. The index for medical care services rose 0.2 percent. Charges for physicians' services and for hospital services each increased 0.2 percent.

The index for recreation costs, which declined 0.1 percent in February, was unchanged in March. A 0.5 percent decline in the index for video and audio equipment and services offset small increases in most other recreational goods and services.

The index for education and communication was unchanged in March. Educational costs rose 0.4 percent, while the index for communication declined 0.3 percent. Within the latter group, decreases in the indexes for personal computers and peripheral equipment and for telephone services- -down 3.5 and 0.2 percent, respectively--more than offset a 2.8 percent increase in the index for delivery services.

The index for other goods and services declined 0.6 percent in March, following a 0.1 percent decrease in February. The index for tobacco and smoking products declined for the second consecutive month--down 3.5 percent in March--following increases totaling 39.6 percent in the 12- month period ended in January. The recent declines reflect discounting of selected major brands.

CPI for Urban Wage Earners and Clerical Workers (CPI-W)

On a seasonally adjusted basis, the CPI for Urban Wage Earners and Clerical Workers increased 0.1 percent in March.

Consumer Price Index data for April are scheduled for release on Friday, May 14, 1999, at 8:30 A.M. (EDT).

CPI (Old Series)

For the first six months of 1999, BLS will also publish Old Series CPI-U and Old Series CPI-W based on the former method of calculating the elementary aggregates, that is, employing an arithmetic mean in all index categories. These old series data are contained in tables 1 (LAS)-4 (LAS). From February to March, the Old Series CPI-U and the Old Series CPI-W rose 0.3 and 0.2 percent, respectively. These series are not seasonally adjusted. (The unadjusted CPI-U and CPI-W using the new method of calculating the elementary aggregates also rose 0.3 and 0.2 percent, respectively, in March.)

Consumer Price Index Formula Changed

On April 16, 1998, the Bureau of Labor Statistics announced its decision to use a new formula for calculating the basic components of the Consumer Price Index for all Urban Consumers (CPI-U) and the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This change is effective with data for January 1999. The new formula, the geometric mean estimator, will be used in index categories that comprise approximately 61 percent of total consumer spending represented by the CPI-U. The remaining index categories, which are shown in the table below, will continue to be calculated as they have been. Based upon BLS research, it is expected that planned use of the new formula will reduce the annual rate of increase in the CPI by approximately 0.2 percentage point per year. The geometric mean estimator has been introduced in both the CPI-U and the CPI-W effective with data for January 1999, in accord with the past practice of introducing methodological changes at the beginning of a calendar year. BLS will continue to publish "overlap" CPI-U and CPI-W series using the former calculation method for the first six months of 1999. These indexes will not be published regularly for months subsequent to June 1999, but will be available upon request. Additional information on this change was published in the April 1998 CPI Detailed Report and is available on the Internet (http://stats.bls.gov/cpihome.htm). This information also may be obtained by writing to the Bureau of Labor Statistics, Division of Consumer Prices and Price Indexes, 2 Massachusetts Ave., N.E., Room 3615, Washington, D.C. 20212 or by calling (202) 606-7000.

Arithmetic Mean (Laspeyres) Formula

1. Selected shelter services:

A) Rent of primary B) Owners' equivalent C) Housing at school, residence rent of primary excluding board residence

2. Selected utilities and government charges:

A) Electricity C) Residential water and E) Telephone services, sewerage maintenance local charges

B) Utility natural gas D) State and local F) Cable television service registration, license, and motor vehicle property tax

3. Selected medical care services:

A) Physicians' services C) Eyeglasses and eye E) Hospital services care B) Dental services D) Services by other F) Nursing homes and medical professionals adult daycare

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-12-ARIMA Seasonal Adjustment Method. 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 1994 through 1998 were replaced at the end of 1998. The seasonal movement of all items and 54 other aggregations is derived by combining the seasonal movement of 73 selected components. Each year the seasonal status of every series is reevaluated based upon certain statistical criteria. If any of the 73 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.

Seasonally adjusted data, including 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.

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 wholesale tobacco prices and legal fees passed on to consumers. 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. The procedure was used to account for unusual butter fat supply reductions affecting the Fats and oils series. 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 or sending e-mail to Gallagher_C@BLS.GOV.