September 2000 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 0.5 percent in September, before seasonal adjustment, to a level of 173.7 (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 3.5 percent.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) rose 0.6 percent in September, prior to seasonal adjustment. The September level of 170.4 was 3.5 percent higher than the index in September 1999.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U rose 0.5 percent in September, following a 0.1 percent decline in August. The upturn reflects a sharp turnaround in the energy index, which increased 3.8 percent in September after declining 2.9 percent in August. In September, the indexes for petroleum-based energy and for energy services increased 5.9 and 1.7 percent, respectively. The food index rose 0.2 percent. The index for food at home increased 0.1 percent after advancing 0.3 percent in August. An increase in the index for fruits and vegetables more than offset declines in the indexes for cereal and bakery products, for meats, poultry, fish, and eggs, and for nonalcoholic beverages. Excluding food and energy, the CPI-U rose 0.3 percent in September, following five consecutive monthly increases of 0.2 percent. A sharp increase in apparel prices and an upturn in the tobacco index were principally responsible for the larger advance in September.

See page 6 for a note on the use of hedonic models to adjust prices of selected products in the CPI for changes in quality.

Consumer prices rose at a seasonally adjusted annual rate (SAAR) of 2.8 percent in the third quarter. This followed increases in the first and second quarters at annual rates of 6.1 and 2.6 percent rate, respectively, and brings the year-to-date annual rate to 3.8 percent. This compares with an increase of 2.7 percent for all of 1999. Energy prices, which turned up sharply in 1999, have continued their advance thus far in 2000. The energy index, which increased 13.4 percent in 1999, has risen at a 18.4 percent SAAR thus far in 2000. In the first nine months of 2000, petroleum-based energy costs increased at a 25.2 percent SAAR, and charges for energy services rose at a 11.7 percent annual rate. The food index has risen at a 2.7 percent SAAR thus far in 2000, following a 1.9 percent increase for all of 1999. The index for food at home, which advanced 1.7 percent in 1999, has risen at a 2.8 percent rate thus far in 2000. Among the major grocery store food groups, the index for meats, poultry, fish, and eggs, has shown the sharpest advance. In particular, meat prices, which began to rise in mid-1999, have continued to increase throughout most of the first 9 months of 2000, advancing at a 7.1 percent SAAR after increasing 3.6 percent in all of 1999.

Excluding food and energy, the CPI-U advanced at a 2.7 percent SAAR in the third quarter, following increases of 3.4 and 2.2 percent, respectively, in the first two quarters of 2000. The 2.8 percent SAAR in the first nine months of 2000 compares with a 1.9 percent rise for all of 1999. Shelter costs, which have risen at a 3.6 percent SAAR thus far this year after increasing 2.5 percent in all of 1999, and medical care costs have been largely responsible for the acceleration thus far in 2000. The rates for selected groups for the last five and three-quarter years are shown below.

The food and beverages index increased 0.1 percent in September. The index for food at home, which rose 0.3 percent in August, increased 0.1 percent in September. The index for fruits and vegetables rose 0.8 percent in September, following increases of 1.0 and 1.2 percent in July and August, respectively. Over the past 12 months, however, fruit and vegetable prices have risen 1.0 percent. In September, within the fruits and vegetables group, the indexes for fresh fruits and for fresh vegetables rose 0.9 and 1.7 percent, respectively. The index for processed fruits and vegetables declined 0.7 percent. The indexes for cereals and bakery products, for nonalcoholic beverages, and for meats, poultry, fish, and eggs, each declined in September. Meat prices turned down in September; the indexes for beef and for pork declined 0.4 and 0.8 percent, respectively. However, over the past 12 months beef and pork prices are up 7.1 and 7.8 percent, respectively. Poultry prices declined for the second consecutive month--down 0.2 percent in September--but have risen 0.7 percent since September 1999. The index for dairy products rose 0.4 percent and the index for other food at home increased 0.1 percent in September. The other two components of the food and beverages index--food away from home and alcoholic beverages--increased 0.3 and declined 0.2 percent, respectively.

The housing index increased 0.4 percent in September, following a 0.2 percent rise in August. The index for fuels and utilities, which declined 0.1 percent in August, increased 2.0 percent in September. The index for fuel oil increased 12.2 percent in September after declining 0.1 percent in August, and has advanced 35.1 percent over the past nine months. The index for natural gas, which declined 0.7 percent in August, rose 5.1 percent in September and has risen 25.4 percent thus far in 2000. The index for electricity, which was unchanged in August, increased 0.1 percent in September and has risen 2.0 percent in the first nine months of the year. Shelter costs increased 0.2 percent in September. Within shelter, the indexes for rent and for owners' equivalent rent increased 0.4 percent and 0.3 percent, respectively, while the index for lodging away from home fell 0.1 percent. The index for household furnishings and operations rose 0.2 percent in September.

The transportation component, which declined in each of the preceding two months, turned back up in September, advancing 1.0 percent. Gasoline prices resumed their upward trend in September--increasing 5.4 percent-- after registering declines in each of the preceding two months. Gasoline prices have advanced 20.4 percent since December after advancing 30.1 percent in all of 1999. The index for new vehicles declined 0.2 percent in September, the same as in August. Price declines on 2000 models more than offset price increases associated with the 2001 models. (About 10 percent of the new vehicle sample in September was represented by 2001 models.) The index for used cars and trucks increased 0.6 percent in September, following declines in each of the preceding two months. Public transportation costs decreased 1.3 percent, largely as a result of a 2.2 percent decline in airline fares. Despite the September drop, airline fares have risen 8.9 percent thus far in 2000.

The index for apparel rose 1.6 percent in September after advancing 0.2 percent in August. (Prior to seasonal adjustment, apparel prices rose 4.1 percent, reflecting the introduction of higher-priced fall-winter wear.)

Medical care costs rose 0.4 percent in September to a level 4.3 percent higher than a year ago. In September, the index for medical care commodities--prescription and nonprescription drugs and medical supplies-- rose 0.2 percent. The index for medical care services rose 0.4 percent. Charges for professional services and for hospital and related services increased 0.3 and 0.6 percent, respectively.

The index for recreation costs increased 0.1 percent in September, the same as in August.

The index for education and communication declined 0.7 percent in September. Educational costs rose 0.4 percent, partially offsetting a 1.7 percent decrease in the index for communication. The index for tuition, other school fees, and child care increased 0.4 percent. (Prior to seasonal adjustment, this index rose 1.7 percent.) Within the index for communication, the indexes for telephone services and for personal computers and peripheral equipment fell 1.9 and 1.5 percent, respectively.

The index for other goods and services increased 1.1 percent in September, following a 0.3 percent decrease in August. Cigarette prices, which declined 1.7 percent in August, increased 3.8 percent in September, accounting for about 85 percent of the overall September advance 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 0.6 percent in September.

Consumer Price Index data for October are scheduled for release on Thursday, November 16, 2000, at 8:30 A.M. (EST).

Extending the use of hedonic models to adjust prices for changes in quality

The Bureau of Labor Statistics (BLS) is continuing to expand the use in the Consumer Price Index (CPI) of quality adjustments derived from hedonic models. As first announced at the time of the July 2000 CPI release, effective with the CPI for October 2000, BLS will extend hedonic quality adjustment to Washing machines and Clothes dryers. These items are both part of the Major appliances stratum.

A hedonic model decomposes the price of a consumer product into implicit prices for each of its important features and components, thereby providing an estimate of the value of each feature and component. BLS plans to extend this method to additional items in the CPI. As BLS does so, it will give CPI users notice at least three months before the first use of hedonic quality adjustment for each additional item and will have detailed papers on the models to be employed available by the time of first use.

The relative importance (share of weight), as of December 1999, of the Major appliances stratum was 0.205 percent in the CPI for all Urban Consumers (CPI-U) and 0.236 percent in the CPI for Urban Wage Earners and Clerical Workers (CPI-W). Within Major appliances, Washing machines are estimated to represent 18 percent of the weight and Clothes dryers about 13 percent.

The hedonic models that BLS analysts developed for Washing machines and Clothes dryers use observations collected for the CPI, supplemented with additional observations that the BLS collected specifically for this purpose. Papers describing this work are in preparation and will be available before release of the October 2000 CPI.

Additional work on hedonic quality adjustment is underway at BLS.

or contact Paul Liegey either by telephone at (202) 691-5394 or by electronic mail at Liegey_P@bls.gov.

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