December 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) declined 0.2 percent in December, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The December level of 180.9 (1982-84=100) was 2.4 percent higher than in December 2001.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) also declined 0.2 percent in December, prior to seasonal adjustment. The December level of 177.0 was 2.4 percent higher than in December 2001.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U rose 0.1 percent in December, the same as in November. The index for food rose 0.3 percent in December, with prices for food at home up 0.3 percent. Energy costs declined for the second consecutive month--down 0.4 percent in December. Within energy, the index for petroleum-based energy declined 1.4 percent while the index for energy services increased 0.5 percent. Excluding food and energy, the CPI-U rose 0.1 percent, following increases of 0.2 percent in the preceding two months. Larger declines in the indexes for household furnishings and operations and for new vehicles, coupled with a smaller increase in the index for shelter, accounted for the deceleration in December.

See page 4 and table 7 for the Chained Consumer Price Index for All Urban Consumers (C-CPI-U), a new supplemental index of consumer price change.

Consumer prices rose at a seasonally adjusted annual rate (SAAR) of 1.8 percent in the fourth quarter. This followed increases in the first three quarters at annual rates of 3.0, 2.5, and 2.5 percent, respectively. For the 12-month period ended in December, the CPI rose 2.4 percent. This compares with an increase of 1.6 percent in all of 2001. The index for energy, which had declined sharply in 2001, following large increases in the preceding two years, advanced 10.7 percent in 2002. Petroleum-based energy costs increased 23.7 percent and charges for energy services increased 0.4 percent. The food index rose 1.5 percent in 2002. The index for grocery store food prices increased 0.8 percent in 2002. Among the major grocery store food groups, the index for fruits and vegetables registered the largest advance--up 4.9 percent--while the index for dairy and related products declined 2.0 percent.

Excluding food and energy, the CPI-U advanced at a 1.5 percent SAAR in the fourth quarter, following increases at rates of 2.1, 1.9, and 2.3 percent in the first three quarters of 2002. The 1.9 percent rise in 2002 compares with a 2.7 percent increase in 2001. The principal reason for the deceleration was a smaller advance in shelter costs--up 3.1 percent in 2002 compared with a 4.2 percent rise in 2001. Also contributing to the moderation this year was a downturn in the index for communication and a larger decline in the index for new and used vehicles. The annual rates for selected groups for the last eight years are shown below.

Percentage change 12 months ended in December

The food and beverages index increased 0.2 percent in December. The index for food at home rose 0.3 percent in December, the same as in November. The indexes for fruits and vegetables and for meats, poultry, fish, and eggs advanced for the second consecutive month--up 0.7 and 0.5 percent, respectively. Within the fruits and vegetables group, the indexes for for fresh fruits and for processed fruits and vegetables rose 1.2 and 1.4 percent, respectively, while the index for fresh vegetables was unchanged. (Prior to seasonal adjustment, fresh fruit and fresh vegetable prices rose 3.3 and 1.9 percent, respectively.) For the 12- month period ended in December, fresh fruit prices have increased 4.7 percent and fresh vegetable prices 6.4 percent. Within the index for meats, poultry, fish, and eggs, price increases for beef and pork were partially offset by a decline in poultry prices. For the 12-month period ended in December, beef prices rose 0.6 percent, while prices for pork and for poultry declined 2.3 and 0.7 percent, respectively. The index for nonalcoholic beverages advanced 1.2 percent in December and 0.9 percent in the last 12 months. In December, the indexes for dairy products and for other food at home each increased 0.1 percent, while the index for cereal and bakery products fell 0.7 percent. The other two components of the food and beverages index, food away from home and alcoholic beverages, increased 0.2 and 0.1 percent, respectively, in December and rose 2.3 and 2.2 percent in 2002.

The index for housing rose 0.2 percent in December. Shelter costs, which increased 0.3 percent in November, advanced 0.2 percent in December. Within shelter, the indexes for rent and owners' equivalent rent increased 0.1 and 0.3 percent, respectively, while the index for lodging away from home fell 0.3 percent. (Prior to seasonal adjustment, the index for lodging away from home declined 3.5 percent.) During the 12 months ended in December 2002, the indexes for rent and for owner's equivalent rent rose 3.1 and 3.3 percent, respectively. In 2001, these indexes rose 4.7 and 4.5 percent, respectively. The index for fuels and utilities rose 0.5 percent in December. The index for fuel oil increased 2.5 percent in December, and prices for fuel oil rose 14.7 percent in all of 2002. In December, the index for natural gas rose 1.2 percent, bringing the increase in 2002 to 6.7 percent. The index for electricity increased 0.4 percent in December, but declined 1.9 percent in the last 12 months. The index for household furnishings and operations declined 0.5 percent in December and 1.5 percent in 2002.

The transportation index declined 0.3 percent in December. The index for gasoline fell 1.4 percent in December, but was 24.8 percent higher than in December 2001. (Prior to seasonal adjustment, gasoline prices declined 3.8 percent in December, and were 18.4 percent below their peak level in May 2001.) The index for new vehicles decreased 0.4 percent in December and during the last 12 months has fallen 2.0 percent. (As of December, about 75 percent of the new vehicle sample was represented by 2003 models. The 2003 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 2003 vehicles represented in the Producer Price Index sample, see news release USDL-02-634, dated November 15, 2002.) The index for used cars and trucks declined 0.1 percent in December to a level 5.5 percent lower than in December 2001. Airline fares, which had registered declines in each of the three preceding months, increased 0.4 percent in December, but were 2.4 percent lower than a year ago.

The index for apparel declined 0.5 percent in December. (Prior to seasonal adjustment, apparel prices fell 3.2 percent, reflecting pre- holiday discounting.) During the 12-month period ended in December, apparel prices declined 1.8 percent, their fifth consecutive annual decline.

Medical care costs rose 0.3 percent in December. The index for medical care commodities--prescription drugs, nonprescription drugs, and medical supplies--was virtually unchanged. The index for medical care services rose 0.4 percent in December. Charges for professional services and for hospital and related services increased 0.4 and 0.7 percent, respectively. In the 12 months ended in December 2002, the index for medical care rose 5.0 percent after increasing 4.7 percent in 2001. The larger advance in 2002 largely reflects the acceleration in charges for hospital and related services--up 9.8 percent, following a 7.1 percent rise in 2001.

The index for recreation, which was unchanged in November, rose 0.2 percent in December. Increases in the indexes for admissions to movies, theaters, concerts, and sporting events, for cable television, and for pets and pet products more than offset decreases in the indexes for sporting goods and for photography. During the last 12 months, cable television and admission costs increased 7.3 and 4.9 percent, respectively, while the index for toys fell 9.3 percent.

The index for education and communication increased 0.2 percent in December after registering no change in October and in November. The education index rose 0.4 percent, while the index for communication costs was unchanged. Within the latter group, a 0.2 percent rise in local charges for telephone services was offset by a 1.5 percent decline in the index for personal computers and peripheral equipment. During the 12 months ended in December, education costs rose 6.6 percent, largely as a result of a 7.0 percent rise in the index for college tuition and fees. The index for communication declined 1.7 percent during the last 12 months, reflecting a 22.1 percent decline in the index for personal computers and peripheral equipment.

The index for other goods and services rose 0.1 percent in December. A 0.4 percent rise in the index for tobacco and smoking products more than offset a 0.1 percent decline in the index for personal care. During the last 12 months, prices for cigarettes have risen 9.8 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 increased 0.1 percent in December.

Chained Consumer Price Index for All Urban Consumers (C-CPI-U)

The C-CPI-U declined 0.3 percent in December on a not seasonally adjusted basis. The December level of 105.8 (December 1999=100) was 2.1 percent higher than in December 2001. Table 7 contains the most recent indexes for all items and the component series that are published. Data will be published monthly in the CPI Detailed Report and are available on the CPI home page: http://www.bls.gov/cpi/. Please note that the indexes for the post-2000 period are subject to revision.

Consumer Price Index data for January are scheduled for release on Friday, February 21, 2003, 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 1998 through December 2002, on Wednesday, February 19, 2003. This date is two working days before the scheduled release of the January 2003 CPI on Friday, February 21, 2003.

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, 2002.

NOTE ON A NEW, SUPPLEMENTAL INDEX OF CONSUMER PRICE CHANGE

The Bureau of Labor Statistics began publishing a consumer price index (CPI) called the Chained Consumer Price Index for All Urban Consumers, effective with release of July data on August 16, 2002. Designated the C-CPI-U, the index supplements 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 employs a Tornqvist formula and utilizes 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 CPI-U and CPI-W. 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 other 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 is 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 is being issued first in preliminary form using the latest available expenditure data at this time and will be subject to two subsequent revisions. Accordingly, with release of the July data, "final" values of the C-CPI-U have been issued for the 12 months of 2000, "interim" values have been issued for the 12 months of 2001, and "initial" values have been 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.

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