December 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) declined 0.4 percent in December, before seasonal adjustment, to a level of 176.7 (1982- 84=100), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. For the 12-month period ended in December, the CPI-U increased 1.6 percent.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) decreased 0.5 percent in December, prior to seasonal adjustment. The December level of 172.9 was 1.3 percent higher than the index in December 2000.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U, which was unchanged in November, declined 0.2 percent in December. The energy index declined sharply for the third consecutive month, down 3.2 percent in December. The index for petroleum-based energy declined 6.1 percent, and the index for energy services fell 0.8 percent. The food index declined 0.1 percent in December, the same as in November. Excluding food and energy, the CPI- U rose 0.1 percent, following an increase of 0.4 percent in November. Downturns in the indexes for tobacco and smoking products and for recreation, coupled with smaller increases in the indexes for medical care and for new vehicles, accounted for the deceleration in December.

See page 6 for a note on planned changes in the CPI in 2002.

Consumer prices declined at a seasonally adjusted annual rate (SAAR) of 2.0 percent in the fourth quarter. This followed increases in the first three quarters at rates of 4.0, 3.7, and 0.7 percent, respectively. For the 12-month period ended in December, the CPI-U rose 1.6 percent. This compares with an increase of 3.4 percent for 2000 and was the smallest annual advance since a 1.6 percent rise in 1998. The index for energy, which registered double-digit increases in both 1999 and 2000, decelerated sharply in 2001, declining 13.0 percent. Petroleum-based energy costs decreased 24.5 percent, and charges for energy services fell 1.5 percent. Within the latter group, charges for natural gas declined 15.1 percent in 2001, following a 36.7 percent increase in 2000, while charges for electricity rose 6.1 percent after increasing 2.6 percent in 2000. The food index rose 2.8 percent in 2001, the same as in the previous year.

Excluding food and energy, the CPI-U advanced at a 2.6 percent SAAR in the fourth quarter, following increases at rates of 3.5, 2.6, and 2.4 percent, respectively, in the first three quarters of 2001. The 2.7 percent rise in 2001 compares with a 2.6 percent rise in 2000. Larger advances were recorded in the indexes for shelter --up 4.2 percent in 2001 compared with 3.4 percent in 2000--for communication--up 0.4 percent in 2001 after declining 3.0 percent in 2000--and for medical care. Partially offsetting the acceleration in these components were downturns in the indexes for airline fares and used cars and a larger decline in the index for apparel. The annual changes for selected groups for the last eight years are shown below.

Percentage change 12 months ended in December

The food and beverages index declined 0.1 percent in December. The index for food at home decreased 0.2 percent, reflecting declines in four of the six major grocery store food groups. The index for fruits and vegetables declined for the second consecutive month--down 1.2 percent in December. Within the fruits and vegetables group, the index for fresh fruits decreased 1.8 percent, and the index for fresh vegetables fell 1.7 percent. (Prior to seasonal adjustment, fresh fruit and fresh vegetable prices each increased 0.8 percent.) The index for processed fruits and vegetables rose 0.4 percent. For the 12-month period ended in December, fresh fruit prices have risen 0.6 percent, while fresh vegetable prices have fallen 4.1 percent. The indexes for meats, poultry, fish, and eggs and for dairy products each declined 0.2 percent in December. Within the former group, beef prices fell 0.5 percent, while the indexes for pork and poultry increased 0.2 and 0.8 percent, respectively. For the 12-month period ended in December, beef, poultry, and pork prices advanced 6.2, 4.4, and 3.7 percent, respectively. Among the other food at home groups, the index for cereal and bakery products fell 0.1 percent in December, while the indexes for nonalcoholic beverages and for other food at home increased 0.1 and 0.5 percent, respectively. The other two components of the food and beverages index--food away from home and alcoholic beverages- -increased 0.1 and declined 0.2 percent, respectively, in December and rose 3.0 and 2.5 percent in 2001.

The index for housing rose 0.2 percent in December, following a 0.4 percent increase in November. Shelter costs advanced 0.4 percent in December, the same as in November. Within shelter, the indexes for rent and for owners' equivalent rent each increased 0.4 percent, and the index for lodging away from home rose 0.3 percent. During the 12-month period ended in December 2001, the indexes for rent and for owners' equivalent rent rose 4.7 and 4.5 percent, respectively, while the index for lodging away from home fell 0.2 percent. In 2000, these indexes rose 4.0, 3.4, and 2.8 percent, respectively. The index for fuels and utilities decreased 0.9 percent in December and 2.1 percent in 2001. The index for natural gas declined 2.1 percent in December and 15.1 percent during the past 12 months after increasing 36.7 percent in 2000. In December, the index for fuel oil declined 7.1 percent. Fuel oil prices, which increased 30.9 percent in 1999 and 40.5 percent in 2000, fell 26.7 percent in 2001. Charges for electricity fell 0.3 percent in December but increased 6.1 percent over the past 12 months. The index for household furnishings and operations was unchanged in December and up 0.2 percent in 2001.

The transportation component declined 0.8 percent in December, reflecting a 6.0 percent decrease in the index for gasoline. (Prior to seasonal adjustment, gasoline prices fell 8.1 percent in December.) Gasoline prices have fallen 34.7 percent in the seven-month period following the peak level reached in May 2001 and were 24.9 percent lower than their level in December 2000. The index for new vehicles increased 0.2 percent in December, but was down 0.1 percent over the last 12 months. (As of December, nearly three-fourths of the new vehicle sample was represented by 2002 models. The 2002 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 2002 vehicles represented in the Producer Price Index sample, see news release USDL-01-405, dated November 9, 2001.) The index for used cars and trucks increased 0.2 percent in December, following declines in each of the preceding eight months. In 2001, the used car index fell 1.9 percent after registering a 3.4 percent increase in 2000. Airline fares decreased 0.4 percent in December, bringing their decline in the last four months of 2001 to 6.3 percent. During 2001, airline fares fell 3.9 percent after increasing 5.9 percent in 2000.

The index for apparel declined 0.6 percent in December. (Prior to seasonal adjustment, apparel prices fell 3.4 percent, reflecting pre- holiday discounting.) During the 12-month period ended in December, apparel prices fell 3.2 percent, their fourth consecutive annual decline.

Medical care costs rose 0.1 percent in December. The index for medical care commodities--prescription drugs, nonprescription drugs, and medical supplies--increased 0.2 percent. The index for medical care services rose 0.1 percent in December. Charges for professional services and for hospital and related services increased 0.2 and 0.5 percent, respectively. In the 12 months ended in December 2001, the index for medical care rose 4.7 percent after increasing 4.2 percent in 2000. The acceleration in 2001 reflects larger increases in the indexes for prescription drugs and hospital and related services--up 6.0 and 7.1 percent, respectively--following increases of 3.6 and 6.2 percent in 2000.

The index for recreation declined 0.2 percent in December, reflecting seasonal price decreases in the indexes for toys, for sporting goods, and for photography. These declines were partially offset by increases in the indexes for reading materials and for pets and pet products. During the last 12 months, increases in recreation services--for admissions to movies, theaters, concerts, and sporting events, for club membership dues, and for fees for lessons or instructions--rose 3.9 percent, accounting for about 75 percent of the overall 1.5 percent change in this major group.

The index for education and communication increased 0.1 percent in December and 3.2 percent in 2001. During the 12 months ended in December, education costs rose 5.6 percent, about the same as in 2000. The index for communication costs turned up in 2001, increasing 0.4 percent after declining 3.0 percent in the 12 months ended in December 2000. An upturn in the index for telephone services and a larger rise in the index for postal and delivery services more than offset the continued decline in prices for personal computers and peripheral equipment--down 30.7 percent.

The index for other goods and services declined 1.0 percent in December, reflecting a 3.4 percent decline in prices for tobacco and smoking products. The index for cigarettes declined 3.6 percent in December, reflecting discounting of selected major brands. During the past 12 months, however, cigarette prices have risen 9.2 percent.

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

On a seasonally adjusted basis, the CPI for Urban Wage Earners and Clerical Workers declined 0.2 percent in December.

Consumer Price Index data for January are scheduled for release on Wednesday, February 20, 2002, at 8:30 A.M. (EST).

Each year with the release of the January CPI, seasonal adjustment factors are recalculated to reflect price movements from the just-completed calendar year. This routine annual recalculation may result in revisions to seasonally adjusted indexes for the previous 5 years. BLS will make available recalculated seasonally adjusted indexes, as well as recalculated seasonal adjustment factors, for the period January 1997 through December 2001, on Friday, February 15, 2002. This date is two working days before the scheduled release of the January 2000 CPI on Wednesday, February 20, 2002.

The revised indexes and seasonal factors will be available on the internet. The address is http://www.bls.gov/cpi. Look under Tables Created by BLS and select Revised Seasonally Adjusted Data, 2001.

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.

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.