September 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 0.5 percent in September, before seasonal adjustment, to a level of 167.9 (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 2.6 percent.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) rose 0.5 in September, prior to seasonal adjustment. The September level of 164.7 was 2.8 percent higher than the index in September 1998.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U rose 0.4 percent in September, following increases of 0.3 percent in each of the preceding two months. In September, energy costs increased sharply for the third consecutive month--up 1.7 percent--accounting for about one quarter of the advance in the overall CPI-U. The index for petroleum-based energy rose 2.7 percent in September, and the index for energy services increased 0.8 percent. For the third consecutive month in September, the food index increased 0.2 percent. The index for food at home, which rose 0.1 percent in both July and August, increased 0.3 percent in September, reflecting a jump in the index for dairy products. Excluding food and energy, the CPI- U rose 0.3 percent in September, following an increase of 0.1 percent in August. Upturns in the indexes for apparel and for cigarettes, coupled with a larger increase in shelter costs, accounted for the acceleration in the September all items less food and energy index.

Consumer prices rose at a seasonally adjusted annual rate (SAAR) of 4.2 percent in the third quarter. This followed increases of 1.5 and 2.9 percent rate in the first and second quarters, respectively, and brings the year-to-date annual rate to 2.8 percent. This compares with an increase of 1.6 percent for all of 1998. The acceleration in 1999 reflects an upturn in petroleum-based energy prices. The energy index, which declined 8.8 percent in 1998, has risen at a 16.1 percent SAAR thus far in 1999. In the nine months of 1999, petroleum-based energy costs increased at a 35.2 percent SAAR, and charges for energy services rose at a 2.2 percent annual rate. The food index has risen at a 2.0 percent SAAR thus far in 1999, following a 2.3 percent increase for all of 1998. Grocery store food prices, which advanced 2.1 percent in 1998, have risen at a 1.6 percent rate thus far in 1999, reflecting in part, deceleration in the index for dairy products.

Excluding food and energy, the CPI-U advanced at a 2.5 percent SAAR in the third quarter, following increases of 0.9 and 2.3 percent, respectively, in the first two quarters of 1999. The 1.9 percent SAAR in the first nine months of 1999 compares with a 2.4 percent rise for all of 1998. Deceleration in the indexes for shelter and for tobacco and smoking products were largely responsible for the smaller rate of advance thus far in 1999. The rates for selected groups for the last five and three- quarter years are shown below.

The food and beverages major group rose 0.2 percent in September, with the index for food at home up 0.3 percent. The index for dairy products, which turned up in August, rose 1.4 percent in September, accounting for about half of the September food at home advance. Also contributing to the September advance were increases in the indexes for cereal and bakery products and for meats, poultry, fish, and eggs--up 0.6 and 0.4 percent, respectively. Within the latter group, prices for beef and pork each increased 1.1 percent and poultry prices rose 0.8 percent. Partially offsetting these advances were declines in the indexes for fruits and vegetables and for nonalcoholic beverages. The index for other food at home was unchanged. Within the fruits and vegetables group, the index for fresh fruits decreased 3.2 percent, while the index for fresh vegetables rose 3.8 percent. The index for processed fruits and vegetables declined 1.0 percent. The other two components of the food and beverages index--food away from home and alcoholic beverages-- increased 0.1 and 0.2 percent, respectively.

The index for housing rose 0.4 percent in September, following an increase of 0.2 percent in August. Shelter costs rose 0.3 percent in September. Within shelter, the indexes for rent and for owners' equivalent rent increased 0.3 and 0.2 percent, respectively, while the index for lodging away from home rose 2.1 percent. (Prior to seasonal adjustment, the index for lodging while away from home declined 2.8 percent.) The index for fuels and utilities increased 0.9 percent in September. The index for household fuels rose 1.1 percent, reflecting increases in each of the three major household fuels. Charges for natural gas and electricity rose 2.7 and 0.1 percent, respectively, and the index for fuel oil increased 6.2 percent. The index for household furnishings and operations rose 0.1 percent in September, the same as in August.

The transportation component advanced for the third consecutive month- -up 0.6 percent in September. The gasoline index increased sharply for the third consecutive month--up 2.6 percent in September, following increases of 4.3 and 5.6 percent in July and August, respectively. Gasoline prices have risen 28.0 percent thus far in 1999, but as of September are 7.7 percent lower than their peak level in November 1990. The index for new and used vehicles rose 0.5 percent in September. The index for new vehicles increased 0.2 percent, reflecting in part the introduction of 2000 model cars. (About 13 percent of the new vehicle sample was represented by 2000 models.) The index for used cars and trucks rose 1.2 percent in September, its fifth consecutive large increase. Airline fares, which declined 2.7 percent in August, fell 1.7 percent in September.

The index for apparel, which declined in each of the preceding four months, rose 1.2 percent in September. (Prior to seasonal adjustment, apparel prices rose 3.4 percent, reflecting the introduction of higher priced fall-winter wear.)

Medical care costs rose 0.3 percent in September to a level 3.4 percent above a year ago. The index for medical care commodities-- prescription drugs, nonprescription drugs, and medical supplies--increased 0.4 percent, with the index for prescription drugs up 0.3 percent. The index for medical care services rose 0.2 percent. Charges for professional services and for hospital and related services increased 0.2 and 0.4 percent, respectively.

The index for recreation costs declined 0.5 percent in September, following three consecutive months of no change. Decreases were recorded in the indexes for virtually all major recreational groups, with the exception of recreational reading materials, which rose 0.3 percent. The categories registering declines include video and audio equipment, pets, pet products and services, sporting goods and equipment, photography, toys, and for recreational services.

The index for education and communication was unchanged in September. Educational costs rose 0.3 percent, and the index for communication declined 0.3 percent. Within the latter group, the index for personal computers and peripheral equipment declined 2.4 percent, and the index for telephone services decreased 0.2 percent.

The index for other goods and services increased 1.9 percent in September, following a 0.2 percent decrease in August. The index for tobacco and smoking products, which fell 1.3 percent in August, rose 6.5 percent in September, reflecting the pass-through of an 18-cent-a-pack increase in wholesale cigarette prices announced in late August.

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 0.5 percent in September.

Consumer Price Index data for October are scheduled for release on Wednesday, November 17, 1999, at 8:30 A.M. (EST).

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.