October 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 0.2 percent in October, before seasonal adjustment, to a level of 174.0 (1982-84=100), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. For the 12-month period ended in October, the CPI-U increased 3.4 percent.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) rose 0.1 percent in October, prior to seasonal adjustment. The October level of 170.6 was 3.4 percent higher than the index in October 1999.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U rose 0.2 percent in October, following a 0.5 percent increase in September. Deceleration in the energy index--up 0.2 percent in October, following a 3.8 percent rise in September--was largely responsible for the moderation in the October CPI-U. In October, the index for petroleum-based energy declined 1.2 percent, while the index for energy services increased 1.5 percent. The food index, which increased 0.2 percent in September, rose 0.1 percent in October. Excluding food and energy, the CPI-U rose 0.2 percent, following a 0.3 percent rise in September. A smaller increase in apparel prices and a downturn in the tobacco index were principally responsible for the more moderate advance in October.

See page 4 for a note on the use of hedonic models to adjust prices of selected products in the CPI for changes in quality.

During the first 10 months of 2000, the CPI-U rose at a 3.6 percent seasonally adjusted annual rate (SAAR). This compares with an increase of 2.7 percent for all of 1999. The energy index, which increased 13.4 percent in 1999, has risen at a 16.6 percent SAAR thus far in 2000. In the first 10 months of 2000, petroleum-based energy costs increased at a 20.7 percent SAAR, and charges for energy services rose at a 12.5 percent annual rate. The food index has risen at a 2.6 percent SAAR thus far in 2000, following a 1.9 percent increase for all of 1999. Excluding food and energy, the CPI-U has advanced at a 2.7 percent rate thus far in 2000, compared with a 1.9 percent rise for all of 1999.

The food and beverages index increased 0.1 percent in October, the same as in September. The index for food at home also increased 0.1 percent for the second consecutive month. Among the six major food-at- home groups, the index for cereal and bakery products registered the largest advance--up 0.9 percent in October. A sharp increase in flour prices also contributed to an increase in prices for most bakery products. The index for fruits and vegetables rose 0.5 percent in October. Within the fruits and vegetables group, the index for fresh fruits rose 3.0 percent, more than offsetting a 2.1 percent decline in the index for fresh vegetables. The index for processed fruits and vegetables increased 0.7 percent. The index for dairy products rose 0.2 percent. The index for meats, poultry, fish, and eggs was unchanged in October. Meat prices declined for the second consecutive month; the indexes for beef and for other meats declined 1.1 and 0.3 percent, respectively, while the index for pork rose 0.2 percent. The indexes for poultry and for eggs each increased in October--up 0.7 and 4.7 percent, respectively. Egg prices have risen 13.6 percent during the past 12 months. In October, the indexes for nonalcoholic beverages and for other food at home decreased 0.5 and 0.6 percent, respectively. The other two components of the food and beverages index--food away from home and alcoholic beverages--each increased 0.2 percent in October.

The housing index increased 0.5 percent in October. The index for fuels and utilities, which rose 2.0 percent in September, advanced 1.3 percent in October. The index for fuel oil increased 1.3 percent in October and has advanced 36.8 percent over the past ten months. The index for natural gas rose 5.1 percent in October and has risen 31.7 percent thus far in 2000. The index for electricity declined 0.1 percent in October, but has increased 1.9 percent in the first ten months of the year. Shelter costs increased 0.4 percent in October, following a 0.2 percent rise in September. Within shelter, the index for rent rose 0.4 percent; owners' equivalent rent increased 0.3 percent; and the index for lodging away from home advanced 0.6 percent. The index for household furnishings and operations was unchanged in October.

The transportation component, which increased 1.0 percent in September, turned back down in October, declining 0.4 percent. Gasoline prices declined 1.4 percent in October after increasing 5.4 percent in September. Despite the October decline, gasoline prices have risen 18.7 percent since December. The index for new vehicles declined for the third consecutive month, down 0.4 percent in October. (Prior to seasonal adjustment, new vehicle prices rose 0.1 percent. As of October, about 27 percent of the new vehicle sample was represented by 2001 models. The 2001 models will continue to be phased in, with appropriate adjustments for quality change, over the next several months as they replace old models at dealerships. For a report on quality changes for the 2001 vehicles represented in the Producer Price Index sample, see news release USDL-00-331, dated November 9, 2000.) The index for used cars and trucks increased 1.1 percent in October. Public transportation costs decreased 2.3 percent, largely as a result of a 3.5 percent decline in airline fares. Despite recent declines, airline fares have risen 5.1 percent thus far in 2000.

The index for apparel rose 0.3 percent in October after advancing 1.6 percent in September. (Prior to seasonal adjustment, apparel prices rose 1.8 percent, reflecting the continued introduction of higher-priced fall- winter wear.)

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

The index for recreation costs was unchanged in October, following increases of 0.1 percent in each of the preceding two months. Price declines for video and audio equipment offset small price increases for most other recreation categories.

The index for education and communication increased 0.8 percent in October, following a 0.7 percent decline in September. Educational costs rose 0.5 percent. The index for tuition, other school fees, and child care increased 0.6 percent. The index for communication, which declined 1.7 percent in September, increased 1.1 percent in October. Within the index for communication, the indexes for telephone services rose 1.3 percent, while the index for personal computers and peripheral equipment fell 1.5 percent.

The index for other goods and services, which increased 1.1 percent in September, declined 0.6 percent in October. Cigarette prices, which increased 3.8 percent in September, fell 2.8 percent in October, accounting for the downturn 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 0.1 percent in October.

Consumer Price Index data for November are scheduled for release on Friday, December 15, 2000, at 8:30 A.M. (EST).

On September 28, The Bureau of Labor Statistics issued corrected Consumer Price Index data for the period from January to August 2000. All of the data in this release incorporate these corrections. For details, see "Revisions in January to August 2000 CPI Data" on the BLS website (http://stats.bls.gov/cpihome.htm) or contact (202) 691-7000.

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 has incorporated 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 make available detailed papers on the models to be employed.

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 forthcoming.

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.

Facilities for Sensory Impaired

Information from this release will be made available to sensory impaired individuals upon request. Voice phone: 202-691-5200, Federal Relay Services: 1-800-877-8339. For a recorded message of Summary CPI data, call (202) 691-5200.