October 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) decreased 0.1 percent in October, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The October level of 185.0 (1982-84=100) was 2.0 percent higher than in October 2002.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) decreased 0.2 percent in October, prior to seasonal adjustment. The October level of 180.7 was 1.9 percent higher than in October 2002.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U was unchanged in October, following increases of 0.3 percent in each of the preceding two months. Energy costs, which advanced sharply in August and September, turned down in October, declining 3.9 percent. Within energy, the index for petroleum- based energy declined 6.6 percent and the index for energy services fell 1.1 percent. The index for food rose 0.6 percent with the index for food at home up 0.7 percent. A 1.8 percent increase in the index for meats, poultry, fish, and eggs accounted for over 60 percent of the increase in grocery store food prices. The index for all items less food and energy increased 0.2 percent in October after advancing 0.1 percent in each of the preceding two months, principally reflecting a larger increase in the index for shelter.

See pages 4 -6 for notes on planned changes in the CPI in 2004.

During the first 10 months of 2003, the CPI-U rose at a 2.3 percent seasonally adjusted annual rate (SAAR). This compares with an increase of 2.4 percent for all of 2002. The index for energy, which rose 10.7 percent in 2002, advanced at an 11.8 percent SAAR in the first 10 months of 2003. Petroleum-based energy costs increased at a 14.6 percent annual rate and charges for energy services rose at a 9.1 percent annual rate. The food index has increased at a 3.1 percent SAAR thus far this year, following a 1.5 percent rise for all of 2002. Excluding food and energy, the CPI-U advanced at a 1.3 percent SAAR in the first 10 months, following a 1.9 percent rise in all of 2002.

The food and beverages index rose 0.6 percent in October. The index for food at home increased 0.7 percent in October, following a 0.3 percent rise in September. The index for meats, poultry, fish and eggs rose 1.8 percent, reflecting a sharp increase in meat prices. Beef prices rose 3.8 percent, their largest advance since a 5.6 percent rise in February 1979. The indexes for pork and for other meats increased 0.9 and 0.8 percent, respectively; the index for poultry rose 1.3 percent. The indexes for dairy products and fruits and vegetables each increased 0.9 percent in October. Milk prices rose 1.6 percent in October and have risen 8.2 percent in the last 3 months. The indexes for fresh vegetables and processed fruits and vegetables increased 2.2 and 0.1 percent, respectively, while the index for fresh fruits was unchanged. Among the other major grocery store food groups, the indexes for nonalcoholic beverages and other food at home rose 0.5 and 0.1 percent, respectively, while the index for cereal and bakery products decreased 0.2 percent. The other two components of the food and beverages index--food away from home and alcoholic beverages--increased 0.3 percent and 0.1 percent, respectively.

The index for housing rose 0.3 percent in October after recording increases of 0.1 percent in August and September. Shelter costs rose 0.4 percent in October, following an increase of 0.1 percent in September. Within shelter, the index for rent was virtually unchanged, while the indexes for owners' equivalent rent and for lodging away from home rose 0.3 and 2.3 percent, respectively. The index for fuels and utilities turned down in October. The indexes for fuel oil and for natural gas each declined 1.5 percent and the index for electricity fell 1.0 percent. (Prior to seasonal adjustment fuel oil prices rose 0.9 percent.) For the 12 months ended in October, charges for natural gas have risen 20.4 percent, fuel oil prices, 8.4 percent, and charges for electricity, 3.2 percent. The index for household furnishings and operations turned up in October, advancing 0.2 percent, following declines in each of the preceding seven months.

The transportation index decreased 1.6 percent in October. The index for gasoline declined 6.8 percent, after advancing 6.3 percent in September. Despite the drop in October, gasoline prices are 9.8 percent higher than in October 2002. The index for new vehicles declined 0.3 percent in October. (As of October, about 30 percent of the new vehicle sample was represented by 2004 models. The 2004 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 2004 vehicles represented in the Producer Price Index sample, see news release USDL-03-721, dated November 14, 2003.) New vehicle prices are 2.2 percent lower than in October 2002. The index for used cars and trucks decreased 3.0 percent in October, and this index has declined 10.4 percent in the last 12 months. The index for public transportation turned up in October after registering declines in the preceding two months. Airline fares, which had declined in August and September, were virtually unchanged, but the indexes for other intercity transportation fares and for intracity transportation fares both recorded increases.

The index for apparel registered its third consecutive monthly increase--up 0.2 percent in October. (Prior to seasonal adjustment, apparel prices rose 2.3 percent, reflecting price increases associated with the continued introduction of fall-winter wear.)

Medical care costs rose 0.3 percent in October and are 3.7 percent higher than a year ago. The index for medical care commodities-- prescription drugs, nonprescription drugs, and medical supplies--increased 0.1 percent. The index for medical care services rose 0.4 percent in October. The indexes for professional services and for hospital and related services both increased 0.3 percent.

The index for recreation was unchanged in October, following a 0.2 percent increase in September. Small increases in the indexes for cable television, for audio equipment, for pet services, for newspapers, and for club membership dues and fees for participant sports were offset by declines in the indexes for toys, for sporting goods and for admissions to movies, theaters, concerts, and sporting events.

The index for education and communication was unchanged in October. Educational costs increased 0.4 percent, while communication costs declined 0.2 percent. The index for college tuition and fees increased 0.6 percent in October to a level 9.7 percent above a year ago. Within the communication group, the index for telephone services decreased 0.3 percent, reflecting a 1.2 percent decline in long distance charges. The index for personal computers and peripheral equipment turned up in October, advancing 1.2 percent. During the last 12 months, however, these prices have fallen 20.3 percent.

In October, for the third consecutive month, the index for other goods and services rose 0.1 percent. An upturn in the index for tobacco and smoking products was largely offset by a smaller rise in the index for personal care services. The index for tobacco and smoking products rose 0.2 percent in October after declining 0.7 percent in September, but is 0.2 percent lower than its level in October 2002.

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

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

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

The C-CPI-U was unchanged in October on a not seasonally adjusted basis. The October level of 108.1 (December 1999=100) was 1.6 percent higher than in October 2002. Table 7 contains the most recent indexes for all items and the component series that are published. Data are 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-2001 period are subject to revision.

Consumer Price Index data for November are scheduled for release on Tuesday, December 16, 2003, at 8:30 A.M. (EST).

Planned Changes in the Consumer Price Index in 2004

Expenditure Weight Update

Effective with release of data for January 2004, the Bureau of Labor Statistics (BLS) will update the consumption expenditure weights in the Consumer Price Index for All Urban Consumers (CPI-U) and Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to the 2001-02 period. The updated expenditure weights for these indexes will replace the 1999-2000 weights that were introduced effective with the January 2002 CPI release. As originally announced by BLS in December 1998, CPI expenditure weights will continue to be updated at two-year intervals subsequent to the 2004 updating.

For the first six months of 2004, BLS will continue to calculate and publish selected CPI-U and CPI-W "overlap" indexes using the 1999-2000 expenditure pattern that was introduced into the CPI in 2002. These indexes will be compiled on a not seasonally adjusted basis. 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 2006 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.

C-CPI-U Index Revisions

As scheduled, effective with release of data for January 2004, the Chained Consumer Price Index for All Urban Consumers (C-CPI-U) will undergo its second annual index revision. 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. Calculation of the preliminary versions of the C-CPI-U--the initial version for January and the subsequent months of 2004 and the interim (revised initial) indexes for 2003--will employ the 2001-02 expenditure weights also used in the CPI- U and CPI-W. Note that the final values of the C-CPI-U employ monthly expenditure weights corresponding to the price collection period in their calculation. Thus, in calculation of the final (revised interim) C-CPI-U values for the months of 2002, the biennial 1999-2000 expenditure weights will be replaced with separate monthly expenditure weights.

Elementary Index Formula Changes

Effective with release of data for January 2004, a geometric mean formula will replace the arithmetic mean formula in the calculation of the elementary indexes in the CPI-U, CPI-W, and C-CPI-U for (1) cable and satellite television and radio services (formerly cable TV) and for (2) eyeglasses and eye care. The geometric mean formula at the elementary index level is more appropriate for use in categories in which the consumer may alter his or her spending in response to changing prices within that category. Since the original decision to employ an arithmetic mean was made by BLS in 1998, changes in the markets for the above- mentioned categories have led to increased opportunity for consumer substitution behavior within those categories. The BLS introduced the geometric mean formula for calculating most of the basic components of the CPI-U and CPI-W with release of the CPI for January 1999.

The BLS will continue to evaluate the appropriateness of the formula used in the calculation of the elementary item indexes and on an annual basis may change or adjust the formula for constructing these indexes. A description of the 1999 adoption of the geometric mean formula is available on the internet at http://www.bls.gov/opub/mlr/1998/10/contents.htm

Title Changes

The following index and average price series will have new titles beginning in January 2004. These series are continuous. The new titles serve to clarify the content of each series.

Index series with new titles

Item Old title New title code

SEHF02 Utility natural gas Utility (piped) gas service service

SERA02 Cable television Cable and satellite television and radio service

SEED01 Telephone services, Land-line telephone local charges services, local charges

SEED02 Telephone services, Land-line telephone long distance charges services, long distance charges

SS27051 Interstate toll calls Land-line interstate toll calls

SS27061 Intrastate toll calls Land-line intrastate toll calls

SEED03 Cellular telephone Wireless telephone services services

SEEE Information and Information technology, information processing hardware, and services other than telephone services

SEEE03 Computer information Internet services and processing services electronic information providers

SEEE04 Other information Telephone hardware, processing equipment calculators, and other consumer information items

Average price series with new titles

Item Old title New title code

72620 Utility natural gas Utility (piped) gas per per therm therm

72601 Utility natural gas - Utility (piped) gas - 40 40 therms therms

72611 Utility natural gas - Utility (piped) gas - 100 100 therms therms

Expanded Collection of Price Data

During the last year, the CPI program completed its conversion to Computer Assisted Data Collection (CADC). Due to the efficiencies gained from the conversion to CADC, BLS will extend data collection to cover the entire month, beginning with data for January 2004.

The new data collection process utilizes hand-held computers called penpads, along with software developed by BLS staff, to collect price and other item characteristic data in stores each month. Data collection instructions are transmitted electronically from Washington to each data collector's penpad. After completing collection the field staff transmit data back to Washington. This electronic collection provides numerous benefits. Many data edits can take place during collection. The accuracy and efficiency of data entry and review are improved by having field staff directly enter data rather than filling out paper survey forms by hand for later computer input by clerical staff. The progress of data collection also can be monitored more effectively throughout the month.

Lastly, the introduction of CADC reduces the time required to transmit and process data. With electronic collection and transmission, the CPI will be able to eliminate the mailing and data entry functions, allowing the BLS to collect prices during the entire index month without compromising the timeliness of the CPI release, which takes place during the middle of the subsequent month.

CPI data collection is scheduled in terms of business days--weekdays excluding holidays. Currently, data collection covers three pricing periods, each comprising six business days in most months and five days in November and December. Consequently, the last day of scheduled data collection is usually the 18th business day of the month. This has allowed time during the end of the month for the mailing of paper schedules back to the Washington Office and the data entry of the information on these schedules. Starting in January 2004, the three pricing periods will have variable lengths, between six and eight business days long. The third pricing period now normally will end on the last business day of the month.

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.