January 2007 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 0.3 percent in January, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The January level of 202.416 (1982-84=100) was 2.1 percent higher than in January 2006.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 0.2 percent in January, prior to seasonal adjustment. The January level of 197.559 (1982-84=100) was 1.8 percent higher than in January 2006.

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) increased 0.3 percent in January on a not seasonally adjusted basis. The January level of 117.417 (December 1999=100) was 1.9 percent higher than in January 2006. Please note that the indexes for the post-2005 period are subject to revision. Previously published and revised data for 2005 and 2006 are shown on page 5.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U advanced 0.2 percent in January, following an increase (cont.)

Effective with this release, index levels are now published to three decimal places. Percent changes based on these three-decimal place indexes will continue to be published to one decimal place. See page 4 for details.

of 0.4 percent in December. Energy costs, which increased 4.2 percent in December, declined 1.5 percent in January. Within energy, the index for petroleum-based energy fell 3.1 percent, while the index for energy services rose 0.5 percent. The food index rose 0.7 percent in January, its largest advance since a 0.8 percent increase in April 2005. The index for all items less food and energy advanced 0.3 percent in January, following a 0.1 percent rise in December; an increase in the index for medical care accounted for about 60 percent of the acceleration.

The food and beverages index rose 0.7 percent in January. The index for food at home increased 0.9 percent, following a 0.3 percent decrease in December. The index for fruits and vegetables, which declined 1.7 percent in December, increased 1.3 percent in January. The indexes for fresh fruits and for fresh vegetables increased 1.5 and 1.9 percent, respectively, while the index for processed fruits and vegetables decreased 0.3 percent. The indexes for nonalcoholic beverages and for other food at home, each of which declined 0.2 percent in December, increased 0.8 and 0.9 percent, respectively, in January. The index for dairy products advanced 1.3 percent in January, following a 0.1 percent rise in December, reflecting large price increases for milk, cheese and ice cream. The index for meats, poultry, fish, and eggs, which also increased 0.1 percent in December, advanced 0.8 percent in January, reflecting increases in the indexes for other meats and for fish and seafood--up 2.7 and 1.4 percent, respectively. The indexes for beef and for pork each increased 0.3 percent, while poultry prices fell 0.4 percent. The index for cereal and bakery products increased 0.3 percent in January, the same as in December. The other two components of the food and beverages index--food away from home and alcoholic beverages-- increased 0.5 and 0.9 percent, respectively.

The index for housing rose 0.2 percent in January, following a 0.4 percent increase in December. The index for fuels and utilities, which increased 1.2 percent in December, rose 0.3 percent in January. The index for fuel oil declined 5.6 percent in January, following a 2.8 percent increase in December. The index for natural gas, which had increased sharply in November and December, declined 3.0 percent in January. These declines were more than offset by increases in the indexes for electricity and for water, sewer and trash collection--up 2.0 and 1.0 percent, respectively. The index for shelter increased 0.3 percent in January, the same as in December. Within shelter, the index for rent rose 0.4 percent; owners' equivalent rent increased 0.2 percent; and the index for lodging away from home rose 1.1 percent. (Prior to seasonal adjustment, the index for lodging away from home increased 4.6 percent.) The index for household furnishings and operations, which rose 0.1 percent in December, declined 0.3 percent in January.

The transportation index declined 0.8 percent in January. The index for gasoline prices, which rose 6.9 percent in December, declined 3.0 percent in January. Gasoline prices, which rose sharply in the first part of 2006, before declining throughout most of the second part of the year, were 2.7 percent lower than a year ago and 32.0 percent lower than their peak level recorded in July 2006. The index for new vehicles was virtually unchanged in January, following declines in each of the preceding three months. (As of January, about 82 percent of the new vehicle sample was represented by 2007 models. The 2007 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.) The index for used cars and trucks decreased 0.7 percent in January. The index for public transportation rose 1.5 percent in January, reflecting a 2.1 percent increase in the index for airline fares.

The index for apparel rose 0.3 percent in January, following a 0.2 percent increase in December. (Prior to seasonal adjustment, apparel prices fell 2.2 percent, reflecting post-holiday discounting.)

Medical care costs rose 0.8 percent in January and are 4.3 percent higher than a year ago. The index for medical care commodities-- prescription drugs, nonprescription drugs, and medical supplies--increased 0.6 percent. The index for medical care services advanced 0.9 percent. The indexes for professional services and for hospital and related services increased 0.8 and 0.6 percent, respectively.

The index for recreation increased 0.1 percent in January. Increases in the indexes for pets, pet products and services, for club membership dues and fees for participant sports, and for admissions to movies, theaters, concerts, and sporting events more than offset declines in the indexes for video and audio, for sporting goods, for photography, and for toys.

The index for education and communication declined 0.1 percent in January. Educational costs increased 0.1 percent, reflecting a 1.7 percent increase in the index for college textbooks. Communication costs decreased 0.4 percent. Within the communication group, the index for information and information processing declined 0.4 percent as a 0.1 percent increase in telephone services was more than offset by declines in the indexes for personal computers and peripheral equipment, for computer software and accessories and for internet services and electronic information providers. The last mentioned component has declined in each of the last seven months and is 22.1 percent lower than in January 2006.

The index for other goods and services increased 0.8 percent in January. The index for tobacco and smoking products, which rose 1.5 percent in December, increased 3.1 percent in January and accounted for four-fifths of the January advance in this major group.

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 January.

Consumer Price Index data for February are scheduled for release on Friday, March 16, 2007, at 8:30 A.M. (EDT).

Consumer Price Index Levels to Three Decimal Places

Effective with this release of the Consumer Price Index (CPI), the Bureau of Labor Statistics has begun computing percent changes based upon three decimal place indexes rather than one decimal place indexes. This change applies to the All Items Consumer Price Index and all component indexes for the CPI-U, CPI-W, and C-CPI-U, for the U.S. City Average and for all other published areas. In addition, CPI index values are displayed to three decimal places in all paper and electronic publications. As in the past, percent changes are rounded to one decimal place.

This change in procedure addresses a rounding issue that has resulted in published percent changes that are 0.1 percentage point higher or lower than the same percent changes based on unrounded index values (i.e., indexes to three or more decimal places). These differences can be particularly important when percent changes are very small. Publishing the index values to three decimal places, and using these values to compute percent changes, essentially eliminates the rounding differences. This change only affects the presentation of the index data. Index values continue to be calculated from underlying price data in the same manner as in the past, and no systematic upward or downward effect on the data is introduced. The levels of future indexes will be affected only in that they will be published to three decimal places rather than one. Official CPI data previously published will not be revised.

Note on Sampling Error in the Consumer Price Index

The CPI is a statistical estimate that is subject to sampling error because it is based upon a sample of retail prices and not the complete universe of all prices. BLS calculates and publishes estimates of the 1- month, 2-month, 6-month and 12-month percent change standard errors annually, for the CPI-U. These standard error estimates can be used to construct confidence intervals for hypothesis testing. For example, the estimated standard error of the 1 month percent change is 0.06 percent for the U.S. All Items Consumer Price Index. This means that if we repeatedly sample from the universe of all retail prices using the same methodology, and estimate a percentage change for each sample, then 95% of these estimates would be within 0.12 percent of the 1 month percentage change based on all retail prices. For a 1-month change of 0.2 percent in the All Items CPI for All Urban Consumers, we are 95 percent confident that the actual percent change based on all retail prices would fall between 0.08 and 0.32 percent. For the latest data, including information on how to use the estimates of standard error, see "Variance Estimates for Changes in the Consumer Price Index, January 2005- December 2005 in the CPI Detailed Report, February 2006. These data are available on the CPI home page (http://www.bls.gov/cpi), using the following link http://www.bls.gov/cpi/cpivar2006.pdf

C-CPI-U Index Revisions

In accordance with the previously-announced schedule, the Bureau of Labor Statistics is revising the 2005 and 2006 values of the Chained Consumer Price Index for All Urban Consumers (C-CPI-U), effective with the release of January 2007 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 2005 are now available, and the C-CPI-U indexes for that year are now in final form. The initial indexes for 2006 are now revised interim indexes. The C-CPI-U U.S. All Items index values for 2005 and 2006 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.Patrick@bls.gov or Cage.Rob@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 2006.

All Items

2006 Former Recalculated Difference

All Items less food and energy

2006 Former Recalculated Difference

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.