January 2001 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 0.6 percent in January, before seasonal adjustment, to a level of 175.1 (1982-84=100), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. For the 12-month period ended in January, the CPI-U increased 3.7 percent.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) also rose 0.6 percent in January, prior to seasonal adjustment. The January level of 171.7 was 3.7 percent higher than the index in January 2000.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U increased 0.6 percent in January, its largest monthly advance since a 0.6 percent rise in March 2000. The energy index rose 3.9 percent in January, accounting for over one-half of the overall CPI-U increase. The index for energy services rose 7.7 percent, largely as a result of a record monthly increase in the index for utility natural gas--up 17.4 percent. The index for petroleum- based energy was unchanged in January. The food index increased 0.3 percent, following a 0.5 percent rise in December. Excluding food and energy, the CPI-U rose 0.3 percent in January, following an increase of 0.1 percent in December. A larger increase in shelter costs and an upturn in the price of cigarettes were the principal factors accounting for the acceleration in January.

See page 4 for a note on planned changes in the CPI in 2002.

The food and beverages index rose 0.2 percent in January. The index for food at home, which increased 0.7 percent in December, rose 0.2 percent in January. A sharp downturn in the index for fruits and vegetables more than offset larger increases in most other food at home groups. The index for fruits and vegetables, which increased 1.7 percent in December, declined 2.7 percent in January. Within the fruits and vegetables group, the indexes for fresh fruits and for fresh vegetables declined 2.9 and 5.5 percent, respectively, while prices for processed fruits and vegetables rose 2.7 percent. The index for dairy products, which rose 0.1 percent in December, advanced 1.3 percent in January, largely as a result of a 2.0 percent increase in the price of milk. The index for meats, poultry, fish, and eggs increased 1.0 percent in January, following a 0.9 percent rise in December. Beef prices rose 2.6 percent in January, their largest monthly advance since a 2.9 percent increase in November 1985. Poultry prices increased 0.1 percent, while the index for pork declined 0.1 percent. The index for nonalcoholic beverages turned up in January, reflecting substantial increases in prices for carbonated drinks and for coffee. The index for other food at home also rose more in January than in December. The index for cereal and bakery products, which increased 0.6 percent in December, rose 0.1 percent in January. A 1.7 percent decline in breakfast cereal prices was largely responsible for the deceleration. The other two components of the food and beverages index-- food away from home and alcoholic beverages--increased 0.4 and 0.3 percent, respectively.

The index for housing rose 1.0 percent in January, following an increase of 0.3 percent in December. The index for fuels and utilities rose 5.9 percent, accounting for over three-fourths of the overall housing increase. The index for natural gas increased 17.4 percent in January and has advanced 59.3 percent in the last 12 months. Charges for electricity rose 2.6 percent in January after increasing 2.6 percent in the 12-month period ended in December. Fuel oil prices, which increased 40.5 percent in all of 2000, turned down in January, declining 4.0 percent. Shelter costs, which increased 0.2 percent in December, advanced 0.3 percent in January. Within shelter, the index for rent rose 0.4 percent, and the indexes for owners' equivalent rent and for lodging away from home each rose 0.3 percent. The index for household furnishings and operations declined 0.1 percent in January, the same as in December.

The transportation component rose 0.3 percent in January after decreasing 0.1 percent in December. Gasoline prices continued to decline, but by less than in December. The index for gasoline decreased 0.1 percent in January. (Prior to seasonal adjustment, gasoline prices fell 0.9 percent in January, following a 3.9 percent drop in December.) The index for new vehicles increased 0.1 percent in January. (As of January, about 78 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 for the fifth consecutive month--up 0.9 percent in January. Among motor vehicle accessories, the index for tires increased 1.3 percent, while the index for motor oil, coolant, and fluids fell 0.9 percent. The index for public transportation increased 0.4 percent; airline fares rose 0.3 percent.

The index for apparel decreased 0.2 percent in January, following a 0.3 percent decline in December. (Prior to seasonal adjustment, apparel prices fell 1.9 percent, reflecting post-holiday discounting.)

Medical care costs rose 0.6 percent in January to a level 4.5 percent higher than a year ago. In January, the index for medical care commodities--prescription drugs, nonprescription drugs, and medical supplies--increased 0.5 percent. The index for medical care services rose 0.6 percent in January. Charges for physicians' services and for hospital services each increased 1.0 percent.

The index for recreation costs increased 0.3 percent in January, following no change in each of the preceding two months. The index for recreation services, largely reflecting a 1.1 percent increase in the index for club membership dues and fees for participant sports, rose 0.7 percent in January and accounted for about three-fourths of the January advance in the recreation group.

The index for education and communication increased 0.4 percent in January. Educational costs rose 0.3 percent, reflecting a 0.7 percent increase in educational books and supplies. The index for communication advanced 0.3 percent, reflecting increases in the indexes for telephone services and postage--up 0.4 and 2.2 percent, respectively--which more than offset a 4.1 percent decrease in the index for personal computers and peripheral equipment.

The index for other goods and services advanced 0.7 percent in January, after declining 0.8 percent in December. The index for cigarettes, which declined 3.8 percent in December, rose 2.0 percent in January, accounting for more than two-thirds of the January 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 January.

Consumer Price Index data for February are scheduled for release on Wednesday, March 21, 2001, at 8:30 A.M. (EST).

Planned Changes in the Consumer Price Index in 2002

Expenditure Weight Update

As announced in December 1998, the Bureau of Labor Statistics (BLS) will update the consumption expenditure weights in the Consumer Price Index for all Urban Consumers (CPI-U) and in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to the 1999-2000 period, effective with release of data for January 2002. The newer weights will replace the 1993-95 weights, which were first used in the index effective with January 1998 data. Additionally, CPI expenditure weights will be updated at two-year intervals subsequent to the 2002 updating. Thus, for example, CPI expenditure weights will be updated to the 2001-02 period effective with release of CPI data for January 2004.

Historically, the introduction of a comprehensive new set of expenditure weights attached to the categories of goods and services in the CPI "market basket" has taken place in the context of the periodic major revisions of the index. Such major revisions have taken place approximately once each decade-in 1940, 1953, 1964, 1978, 1987 and, most recently, in 1998.

The goal in employing more current expenditure weights is to have the CPI reflect, as much as possible, the inflation currently experienced by consumers. More specifically, the use of more current weights will help to ensure that the relative importance of CPI item categories, such as food away from home, college tuition, or medical care services, more accurately reflects how consumers are allocating their spending.

Publication of Overlap CPIs

For the first six months of 2002, BLS will continue to calculate and publish selected CPI-U and CPI-W "overlap" indexes on a not seasonally adjusted basis. These indexes will be compiled using the 1993-95 expenditure pattern that was introduced into the CPI in 1998. Comparison of these index series to the corresponding updated series will enable users of the CPI to observe the effects of the expenditure weight change. The subsequent expenditure updates scheduled in 2004 and every two years thereafter also will be accompanied by the publication of overlap indexes for a six-month period using the previous expenditure pattern.

Publication of CPI for the Phoenix Area

Effective with release of the July 2002 Consumer Price Index (CPI), BLS will initiate publication of consumer price data specific to the Phoenix-Mesa, Arizona, Metropolitan Statistical Area. As with the national CPI and other local area CPIs, data will be published for each of two population groups, that for all urban consumers (CPI-U) and that for urban wage earners and clerical workers (CPI-W). The Phoenix-Mesa CPI will be published on a semi-annual basis with a reference base of December 2001 = 100. The same amount of item detail will be available for Phoenix- Mesa as is presently available for all other areas published on a semi- annual basis.

Change to Published Item Structure

Effective with release of the January 2002 CPI, BLS will begin publishing an item index for leased cars and trucks. This index series will be available monthly at the U.S. City Average area level for both the CPI-U and CPI-W with a December 2001 = 100 reference base.

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 1996 through 2000 were replaced at the end of 2000. 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. Note: 38 of the 73 components are seasonally adjusted for 2001.

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, natural gas, motor fuels, and educational books and supplies 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 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 Daniel Chow on (202) 691-6968 or sending e-mail to Chow_Dan@BLS.GOV. If you have general questions about the CPI, please call our information staff at (202) 691-7000.

Over-the-month percent changes in the U.S. City Average Consumer Price Index for All Urban Consumers (CPI-U) for All Items and for All Items less food and energy, seasonally adjusted, using former and recalculated seasonal factors for 2000.

All Items

2000 Former Recalculated Difference

All Items less food and energy

2000 Former Recalculated Difference

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.