January 2003 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 0.4 percent in January, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The January level of 181.7 (1982-84=100) was 2.6 percent higher than in January 2002.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) also increased 0.4 percent in January, prior to seasonal adjustment. The January level of 177.7 was 2.6 percent higher than in January 2002.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U rose 0.3 percent in January, following increases of 0.1 percent each of the preceding two months. Energy costs, which declined in November and December, increased 4.0 percent in January. Within energy, the index for petroleum-based energy advanced 6.6 percent and the index for energy services increased 1.5 percent. Meanwhile, the indexes for food and for all items less food and energy decelerated in January. The index for food declined 0.2 percent, following increases of 0.2 percent in each of the preceding two months. The index for all items less food and energy, which increased 0.2 percent in December, rose 0.1 percent in January. A smaller increase in the index for medical care, coupled with declines in the indexes for apparel and public transportation, accounted for the smaller advance in January.

See pages 4 and 5 regarding revisions to the Chained Consumer Price Index for All Urban Consumers (C-CPI-U).

The food and beverages index declined 0.2 percent in January. The index for food at home, which rose 0.2 percent in December, declined 0.2 percent in January, reflecting downturns in the indexes for fruits and vegetables, for meats, poultry, fish and eggs, for dairy products, and for nonalcoholic beverages. The index for fruits and vegetables declined 1.2 percent, following a 0.5 percent rise in December. The indexes for fresh fruits, fresh vegetables, and processed fruits and vegetables all declined- -down 0.3, 1.5, and 2.1 percent, respectively. (Prior to seasonal adjustment, fresh fruits and processed fruits and vegetables declined 0.8 and 0.3 percent, respectively, while fresh vegetable prices rose 3.5 percent.) The index for meats, poultry, fish, and eggs, which rose 0.3 percent in December, declined 0.3 percent in January, reflecting declines in prices for frankfurters and lunch meats. The indexes for beef and for pork increased 0.1 and 0.6 percent, respectively. Poultry prices fell for the second consecutive month--down 0.8 percent in January. The index for dairy products, which rose slightly in December, declined 0.5 percent in January, largely as a result of a 1.1 percent drop in the index for cheese and related products. A sharp turnaround in the index for carbonated drinks--down 1.1 percent in January after increasing 1.2 percent in December--was largely responsible for the 0.5 percent drop in the index for nonalcoholic beverages. The remaining two major grocery store food groups--cereal and bakery products and other food at home--increased 1.0 percent and were unchanged, respectively. The index for food away from home declined 0.1 percent, while the index for alcoholic beverages increased 0.3 percent

The index for housing rose 0.4 percent in January. Shelter costs, which increased 0.2 percent in December, advanced 0.3 percent in January. Within shelter, the index for rent increased 0.4 percent, owners' equivalent rent increased 0.3 percent, and the index for lodging away from home rose 0.1 percent. (Prior to seasonal adjustment, the index for lodging away from home rose 4.7 percent.) The index for fuels and utilities rose 1.4 percent in January. The index for fuel oil increased 8.6 percent in January, and prices for fuel oil were 26.7 percent higher than in January 2002. The index for natural gas rose 4.6 percent, bringing the increase in past 12 months to 10.7 percent. The index for electricity increased 0.3 percent in January, but declined 0.8 percent in the last 12 months. The index for household furnishings and operations rose 0.2 percent in January.

The transportation index increased 1.1 percent in January after registering declines in each of the preceding two months. The index for gasoline, which declined in November and December, rose 6.6 percent in January, accounting for the upturn in the transportation index. The index for new vehicles decreased 0.9 percent in January and during the last 12 months has fallen 2.1 percent. (As of January, about 83 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.) In January, the index for used cars and trucks turned up, advancing 0.2 percent, but this index has declined 4.7 percent in the last 12 months. Airline fares, which had turned up in December, declined 0.6 percent in January and are 3.4 percent lower than a year earlier.

The index for apparel declined 0.9 percent in January. (Prior to seasonal adjustment, apparel prices fell 2.8 percent, reflecting post- holiday discounting.).

Medical care costs rose 0.1 percent in January to a level 4.6 percent higher than a year ago. The index for medical care commodities-- prescription drugs, nonprescription drugs, and medical supplies--rose 0.2 percent. The index for medical care services rose 0.1 percent in January. Charges for professional services were unchanged, while charges for hospital and related services increased 0.4 percent.

The index for recreation rose 0.2 percent in January, the same as in December. Increases in the indexes for admissions to movies, theaters, concerts, and sporting events, for pets and pet products, for sporting goods, and for photography were partially offset by declines in the indexes for video and audio and for toys--down.0.4 and 0.6 percent, respectively.

The index for education and communication increased 0.5 percent in January, following a 0.2 percent rise in December. In January, the education index rose 0.6 percent, reflecting a 2.0 percent rise in prices for college textbooks. The index for communication costs rose 0.2 percent, reflecting a 0.5 percent increase in charges for telephone services. Charges for interstate toll calls increased 1.5 percent. Partially offsetting this advance in communication costs was a 1.0 percent decline in the index for personal computers and peripheral equipment.

The index for other goods and services rose 0.2 percent in January. The index for personal care rose 0.3 percent, reflecting increases of 1.0 and 0.7 percent in charges for legal services and for funeral expenses, respectively. The index for tobacco and smoking products was virtually unchanged in January, but has advanced 9.1 percent during the last 12 months.

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 0.3 percent in January.

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

The C-CPI-U increased 0.4 percent in January on a not seasonally adjusted basis. The January level of 106.4 (December 1999=100) was 2.2 percent higher than in January 2002. 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 2002 and 2003 are subject to revision. Previously published and revised data for 2001 and 2002 are shown on page 5.

Consumer Price Index data for February are scheduled for release on Friday, March 21, 2003, at 8:30 A.M. (EST).

NOTE ON REVISIONS TO C-CPI-U INDEXES

In accordance with the previously-announced schedule, the Bureau of Labor Statistics is revising the 2001 and 2002 values of the Chained Consumer Price Index for All Urban Consumers (C-CPI-U), effective with the release of January 2003 data.

The C-CPI-U was introduced with release of July data on August 16, 2002. The index in its final form 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 C-CPI-U was 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 a current period distinguishes the C-CPI-U from the other CPI measures, which use only a single expenditure base period to compute price change over time.

Because the current expenditure data required for the calculation of the C-CPI-U are available only with a time lag, the index is issued first in preliminary form, using the latest available expenditure data at the time of publication, and is subject to two subsequent revisions. The preliminary values for each month of the preceding two years are revised annually with release of the January index. Expenditure data for the year 2001 are now available, and the C-CPI-U indexes for that year are now in final form. The initial indexes for 2002 are now revised interim indexes. The C-CPI-U U.S All Items index values for 2001 and 2002 as originally published and revised are shown below.

Bureau of Labor Statistics Division of Consumer Prices and Price Indexes 2 Massachusetts Ave. NE, Room 3130 Washington, DC 20212

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 .

U.S. City Average C-CPI-U All Items

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 2002.

All Items

2002 Former Recalculated Difference

All Items less food and energy

2002 Former Recalculated Difference

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 1998 through 2002 were replaced at the end of 2002. In January 2002, dependently seasonally adjusted series were revised for January 1987- December 2001 as a result of a change in the aggregation weights for dependently adjusted series. For further information, please see "Aggregation of Dependently Adjusted Seasonally Adjusted Series," in the October 2001 issue of the CPI Detailed Report.

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: 44 of the 73 components are seasonally adjusted for 2003.

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 and decreases in milk supply affecting the Fats and oils series. For the Water and sewerage maintenance index, the procedure was used to account for a data collection anomaly and dry weather in California. It was used to offset an increase in demand due to warmer than expected weather and increased rates to conserve supplies for Electricity. For New vehicles, New cars, and New trucks, the procedure was used to offset the effects of a model changeover combined with financing incentives.

For a complete list of series that used Intervention Analysis Seasonal Adjustment, a list of unusual events modeled for them, or for a description of intervention analysis please write to 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.

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.