January 2004 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 0.5 percent in January, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The January level of 185.2 (1982-84=100) was 1.9 percent higher than in January 2003.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 0.6 percent in January, prior to seasonal adjustment. The January level of 180.9 (1982-84=100) was 1.8 percent higher than in January 2003.

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) increased 0.5 percent in January, prior to seasonal adjustment. The January level of 108.1 (December 1999=100) was 1.6 percent higher than in January 2003. Please note that the indexes for the post-2002 period are subject to revision. Previously published and revised data for 2002 and 2003 are shown on page 5.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U increased 0.5 percent in January, following an increase of 0.2 percent in December. Energy costs, which rose 0.3 percent in December, advanced 4.7 percent in January, accounting for over three-fourths of the overall January increase. Within energy, the index for petroleum-based energy advanced 8.0 percent and the index for energy services rose 1.6 percent. The index for food was unchanged in January. The index for food at home declined 0.3 percent, reflecting decreases in the indexes for fruits and vegetables and for beef. The index for all items less food and energy increased 0.2 percent in January, following a 0.1 percent rise in December.

The food and beverages index declined 0.1 percent in January. The index for food at home decreased 0.3 percent, following increases of 0.6 percent or more in each of the preceding three months. Five of the six major grocery store food groups either declined in January or advanced less than in December. The index for cereal and bakery products increased the same in January as in December--up 0.1 percent. The indexes for fruits and vegetables, for dairy products, and for other food at home declined 1.8, 0.3, and 0.4 percent, respectively. Within the fruits and vegetables group, the indexes for fresh vegetables and for fresh fruits declined 3.3 and 1.4 percent, respectively, while the index for processed fruits and vegetables increased 0.4 percent. (Prior to seasonal adjustment, fresh vegetable prices rose 0.5 percent, while fresh fruit prices declined 1.8 percent.) The index for meats, poultry, fish, and eggs was unchanged in January. Beef prices, which had risen sharply in the fourth quarter of 2003, declined in January--down 1.8 percent after seasonal adjustment. This decline was offset by price increases for each of the other major components of the meats, poultry, fish, and eggs group. The index for nonalcoholic beverages increased 0.3 percent, following a 0.7 percent rise in December. The other two components of the food and beverages index--food away from home and alcoholic beverages--increased 0.3 and 0.4 percent, respectively.

The index for housing increased 0.4 percent in January, following a 0.2 percent rise in December. Larger increases in fuel prices, coupled with an upturn in the index for household furnishings and operations, more than offset a smaller increase in shelter costs. The index for shelter, which increased 0.2 percent in December, rose 0.1 percent in January. Within shelter, the indexes for rent and for owners' equivalent rent each increased 0.1 percent while the index for lodging away from home fell 0.2 percent. (Prior to seasonal adjustment, the index for lodging away from home increased 3.8 percent.) The index for fuels and utilities, which increased 0.5 percent in December, advanced 1.6 percent in January. The index for fuel oil turned up in January, advancing 7.2 percent. The indexes for natural gas and for electricity also accelerated, advancing 3.8 and 0.6 percent, respectively. The index for household furnishings and operations, which declined 0.1 percent in December, rose 0.4 percent in January. Prices for most household furnishings, other than for major appliances, registered increases in January, but are still lower than in January 2003.

The transportation index, which recorded declines in each of the preceding three months, increased 1.7 percent in January. The index for gasoline increased 8.1 percent, accounting for over 90 percent of the January transportation advance. The index for new vehicles decreased for the fifth consecutive month--down 0.1 percent in January. (As of January, about 83 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.) The index for used cars and trucks decreased 0.2 percent in January. Motor vehicle fees rose 6.2 percent, reflecting increased charges for state and local registration and license fees. The index for public transportation increased 0.2 percent in January, as increases in airline fares and intracity transportation more than offset a decline in other intercity transportation costs.

The index for apparel declined 0.3 percent in January, the same as in December. (Prior to seasonal adjustment, apparel prices fell 2.7 percent, reflecting post-holiday discounting.)

Medical care costs rose 0.2 percent in January and are 3.8 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 0.3 percent in January. The indexes for professional services and for hospital and related services increased 0.2 and 0.3 percent, respectively.

The index for recreation was unchanged in January. A 1.1 percent increase in the index for admissions to movies, theaters, concerts, and sporting events was largely offset by decreases in the indexes for toys and for televisions--down 1.3 and 1.8 percent, respectively.

The index for education and communication increased 0.1 percent in January. Educational costs increased 0.5 percent, reflecting a 1.0 percent increase in the index for college tuition. Communication costs declined 0.3 percent. A 1.8 percent decline in the index for long distance telephone services more than offset increases in the indexes for local telephone services and for delivery services--up 0.2 and 8.1 percent, respectively.

The index for other goods and services increased 0.3 percent in January. The index for tobacco and smoking products rose 0.6 percent, its largest increase since a 0.6 percent rise in August. Price increases were also recorded for the indexes for legal services, for funeral expenses, and for financial services--up 0.8, 0.6, and 0.4 percent, respectively.

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 0.6 percent in January.

Consumer Price Index data for February are scheduled for release on Wednesday, March 17, 2004, at 8:30 A.M. (EST).

CPI (Old Weights)

For the first six months of 2004, BLS also will calculate Old Weights CPI-U and Old Weights CPI-W based on the 1999-2000 expenditure pattern used in the CPI from 2002 through 2003. These Old Weight data are contained in tables 1(OW)-4(OW). From December 2003 to January 2004, the Old Weight CPI-U rose 0.5 percent and the Old Weight CPI-W rose 0.6 percent. Note these series are not seasonally adjusted.

NOTE ON REVISIONS TO C-CPI-U INDEXES

In accordance with the previously-announced schedule, the Bureau of Labor Statistics is revising the 2002 and 2003 values of the Chained Consumer Price Index for All Urban Consumers (C-CPI-U), effective with the release of January 2004 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 2002 are now available, and the C-CPI-U indexes for that year are now in final form. The initial indexes for 2003 are now revised interim indexes. The C-CPI-U U.S All Items index values for 2002 and 2003 as originally published and revised are shown below.

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 2003.

All Items

2003 Former Recalculated Difference

All Items less food and energy

2003 Former Recalculated Difference

Changes in the Consumer Price Index in 2004

Expenditure Weight Update As announced, the Bureau of Labor Statistics (BLS) has updated 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 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, the Chained Consumer Price Index for All Urban Consumers (C-CPI-U) has undergone its second annual index revision. C-CPI-U indexes for the 12 months of 2002 have been issued in final form and values for the 12 months of 2003 have been 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 have been replaced with separate monthly expenditure weights. Elementary Index Formula Changes Effective with release of data for January 2004, a geometric mean formula replaced 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 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 has extended 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 has been 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. Formerly, data collection covered 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 was usually the 18th business day of the month. This 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 now have variable lengths, between six and eight business days long. The third pricing period 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.