January 2002 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 0.2 percent in January, before seasonal adjustment, to a level of 177.1 (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 1.1 percent.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) also increased 0.2 percent in January, prior to seasonal adjustment. The January level of 173.2 was 0.9 percent higher than the index in January 2001.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U increased 0.2 percent in January, following a 0.1 percent decline in December. The energy index, which declined sharply in each of the preceding three months, advanced 0.9 percent in January. The index for petroleum-based energy increased 2.5 percent, while the index for energy services fell 0.4 percent. The food index, which was unchanged in December, rose 0.3 percent in January, reflecting an upturn in prices for fruits and vegetables. Excluding food and energy, the CPI-U rose 0.2 percent in January after increasing 0.1 percent in December. Upturns in the indexes for tobacco and smoking products and for recreation, coupled with a larger increase in the index for medical care, accounted for the larger advance in January.

The food and beverages index increased 0.3 percent in January. The index for food at home, which declined 0.1 percent in December, increased 0.3 percent in January. A sharp increase in the index for fruits and vegetables--up 3.3 percent--was primarily responsible for the upturn. Within the fruits and vegetables group, the indexes for fresh vegetables and for fresh fruits increased 4.1 and 3.0 percent, respectively. Prices for processed fruits and vegetables rose 2.3 percent. Also contributing to the advance in January were upturns in the indexes for cereal and bakery products and for meats, poultry, fish, and eggs. The index for cereal and bakery products, which declined 0.1 percent in December, rose 0.6 percent in January, reflecting increases in prices for flour and breakfast cereal. The index for meats, poultry, fish, and eggs was unchanged in January after declining 0.1 percent in December. In January, beef and poultry prices fell 0.3 and 0.5 percent, respectively, while the index for pork increased 0.9 percent. Among the other food at home groups, the indexes for dairy products, for nonalcoholic beverages, and for other food at home each declined in January, down 0.5, 0.6, and 0.3 percent, respectively. The other two components of the food and beverages index--food away from home and alcoholic beverages--increased 0.2 and 0.3 percent, respectively.

The index for housing rose 0.2 percent in January, the same as in December. Shelter costs advanced 0.3 percent in January. Within shelter, the indexes for rent and for owners' equivalent rent each increased 0.3 percent, while the index for lodging away from home fell 0.7 percent. The index for fuels and utilities registered a 0.2 percent decrease in January. A 1.2 percent increase in the index for natural gas was more than offset by declines in the indexes for fuel oil and for electricity, down 1.7 and 1.2 percent, respectively. The index for household furnishings and operations declined 0.4 percent.

The transportation component increased 0.3 percent in January, reflecting an upturn in the index for gasoline. Gasoline prices rose 1.9 percent in January after declining 27.0 percent in the preceding three- month period. Partially offsetting this increase was a 0.6 percent decrease in the index for new vehicles. (As of January, about 85 percent 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, 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 declined 0.4 percent. During the last 12 months, the index for new vehicles has declined 0.7 percent and the index for used cars and trucks has fallen 3.0 percent. The index for public transportation rose 0.2 percent in January. Airline fares rose 0.4 percent, following declines in each of the last six months of 2001.

The index for apparel declined for the third consecutive month, down 0.7 percent in January. (Prior to seasonal adjustment, apparel prices fell 2.7 percent, reflecting post-holiday discounting.)

Medical care costs rose 0.5 percent in January. The index for medical care commodities--prescription drugs, nonprescription drugs, and medical supplies--increased 0.3 percent. The index for medical care services rose 0.5 percent in January. Charges for professional services and for hospital and related services increased 0.3 and 0.9 percent, respectively.

The index for recreation rose 0.2 percent in January, following a 0.1 percent decline in December. The indexes for toys and for video and audio turned up in January, advancing 1.2 and 0.5 percent, respectively, after declining 1.3 and 0.1 percent in December.

The index for education and communication increased 0.3 percent in January. Education costs rose 0.6 percent, while the index for communication costs was unchanged. Within the latter category, increases in the indexes for telephone services and for delivery services--up 0.6 and 0.7 percent, respectively--were largely offset by the continued decline in prices for personal computers and peripheral equipment--down 2.8 percent.

The index for other goods and services increased 0.3 percent in January. The index for cigarettes increased 0.2 percent in January, as a 5 cent a pack increase in the federal excise tax on cigarettes was largely offset by discounting of selected major brands. CPI for Urban Wage Earners and Clerical Workers (CPI-W)

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

Consumer Price Index data for February are scheduled for release on Thursday, March 21, 2002, at 8:30 A.M. (EST).

CPI (Old Weights)

For the first six months of 2002, BLS also will calculate Old Weights CPI-U and Old Weights CPI-W based on the 1993-95 expenditure pattern used in the CPI from 1998 through 2001. These Old Weight data are contained in tables 1(OW)-4(OW). From December 2001 to January 2002, the Old Weights CPI-U rose 0.3 percent and the Old Weights CPI-W rose 0.2 percent. Note these series are not seasonally adjusted.

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 2001.

All Items

2001 Former Recalculated Difference

All Items less food and energy

2001 Former Recalculated Difference

Planned Changes in the Consumer Price Index in 2002

Expenditure Weight Update

As announced in December 1998, the Bureau of Labor Statistics (BLS) has updated 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 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 began publishing an item index for leased cars and trucks. This index series is 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.

NOTE ON A NEW, SUPPLEMENTAL INDEX OF CONSUMER PRICE CHANGE

The Bureau of Labor Statistics will begin publishing a consumer price index (CPI) called the Chained Consumer Price Index for All Urban Consumers, effective with release of July data in August 2002. Designated the C-CPI-U, the index will supplement the existing indexes already produced by the BLS: the CPI for All Urban Consumers (CPI-U) and the CPI for Urban Wage Earners and Clerical Workers (CPI-W).

The C-CPI-U will employ a Tornqvist formula and utilize expenditure data in adjacent time periods in order to reflect the effect of any substitution that consumers make across item categories in response to changes in relative prices. The new measure, said to be a "superlative" index, is designed to be a closer approximation to a "cost-of-living" index than the present measures. The use of expenditure data for both a base period and the current period in order to average price change across item categories distinguishes the C-CPI-U from the existing CPI measures, which use only a single expenditure base period to compute the price change over time. In 1999, the BLS introduced a geometric mean estimator for averaging prices within most of the index's item categories in order to approximate the effect of consumers' responses to changes in relative prices within these item categories. The geometric mean estimator will be used in the C-CPI-U in the same item categories in which it is now used in the CPI-U and CPI-W. (See Monthly Labor Review, October 1998, pp. 3-7.)

Expenditure data required for the calculation of the C-CPI-U are available only with a time lag. Thus, the C-CPI-U will be issued first in preliminary form using the latest available expenditure data at that time and will be subject to two subsequent revisions. Accordingly, at the time of its introduction in August, "final" values of the C-CPI-U will be issued for the 12 months of 2000, "interim" values will be issued for the 12 months of 2001, and "initial" values will be issued for January-July 2of 2002. In February 2003, with release of the January 2003 index, revised interim indexes for the 12 months of 2002 will be published, and the index values for 2001 will be revised and will become final. Then, in February 2004, when the monthly expenditure data from calendar year 2002 become available, C-CPI-U indexes for the 12 months of 2002 will be issued in final form and values for the 12 months of 2003 will be revised and issued as interim. The C-CPI-U index revisions are expected to be small, but in principle each monthly index could be revised from its previously published level.

BLS previously has calculated superlative indexes on an experimental basis, although these are not comparable to the C-CPI-U in all computational details. (See, for example, Monthly Labor Review, December 1993, pp. 25-33.) Based on BLS research, the C-CPI-U is estimated to increase at an average annual rate of 0.1 to 0.2 percentage point less than the CPI-U.

The C-CPI-U will be issued for national averages only and will not be seasonally adjusted. It will employ a December 1999=100 reference base. Data for periods prior to December 1999 will not be calculated. The component series that will be published are listed below:

All items Medical care Food and beverages Medical care commodities Food Medical care services Food at home Recreation Food away from home Education and communication Alcoholic beverages Education Housing Communication Shelter Other goods and services Fuels and utilities Services Household furnishings Commodities and operations Durables Apparel Nondurables Transportation All items less food and energy Private transportation Energy Public transportation

These indexes will be published monthly in the CPI news release and the CPI Detailed Report, and the series will be available electronically at the same site as other CPI data: http://www.bls.gov/cpi/.

The Bureau of Labor Statistics will brief reporters and other CPI users on the new C-CPI-U index at 10:00 a.m. EST, Friday, Feb. 22, in Conference Center Rooms 1 and 2 of the Postal Square Building, 2 Massachusetts Ave., N.E.

Or contact Patrick Jackman or Rob Cage either by telephone at (202) 691- 6952 or by electronic mail at Jackman_P@bls.gov or Cage_R@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.