September 2014 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 0.1 percent in September on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.7 percent before seasonal adjustment.

Increases in shelter and food indexes outweighed declines in energy indexes to result in the seasonally adjusted all items increase. The food index rose 0.3 percent as five of the six major grocery store food group indexes increased. The energy index declined 0.7 percent as the indexes for gasoline, electricity, and fuel oil all fell.

The index for all items less food and energy increased 0.1 percent in September. Along with the shelter index, the index for medical care increased, and the indexes for alcoholic beverages and for personal care advanced slightly. Several indexes were unchanged, and the indexes for airline fares and for used cars and trucks declined in September.

The all items index increased 1.7 percent over the last 12 months, the same increase as for the 12 months ending August. The 12-month change in the index for all items less food and energy also remained at 1.7 percent. The 12-month change in the shelter index has been gradually increasing, and reached 3.0 percent for the first time since January 2008. The food index has also risen 3.0 percent over the span, while the energy index has declined 0.6 percent.

Seasonally adjusted changes from preceding month Un- adjusted 12-mos. Mar. Apr. May June July Aug. Sep. ended 2014 2014 2014 2014 2014 2014 2014 Sep. 2014

Consumer Price Index Data for September 2014

Food

The food index rose 0.3 percent in September after increasing 0.2 percent in August. The index for meats, poultry, fish, and eggs continued to rise, increasing 0.7 percent after a 1.5 percent increase in August. The index for beef and veal rose 2.0 percent in September and has now risen 16.7 percent since January. The index for dairy and related products increased 0.5 percent, its tenth increase in the last 11 months. The index for other food at home also rose 0.5 percent in September, with the index for sugar and sweets increasing 1.6 percent. The index for nonalcoholic beverages, which declined 0.2 percent in August, rose 0.2 percent in September. The fruits and vegetables index also turned up in September, rising 0.1 percent after declining in August. The index for fresh fruits rose 1.3 percent, while the fresh vegetables index fell 1.1 percent. The cereals and bakery products index declined in September, falling 0.4 percent. The food at home index has risen 3.2 percent over the past year. The index for meats, poultry, fish, and eggs has increased 9.4 percent over that span, with the index for beef and veal up 17.8 percent and the pork index up 11.4 percent. The fruits and vegetables index has increased only 0.9 percent over the last 12 months, the index for nonalcoholic beverages has risen 0.2 percent, and the cereals and bakery products index has declined slightly, falling 0.1 percent. The index for food away from home rose 0.3 percent in September and has increased 2.7 percent over the last 12 months.

Energy

The energy index fell 0.7 percent in September, its third consecutive decline. The gasoline index, which declined 4.1 percent in August, fell 1.0 percent in September. (Before seasonal adjustment, gasoline prices fell 2.1 percent in September.) The electricity index also declined in September, falling 0.7 percent after rising slightly in August. The fuel oil index decreased as well, falling 2.1 percent. In contrast to these declines, the index for natural gas turned up in September, rising 1.6 percent after falling in each of the 4 previous months. The energy index has fallen 0.6 percent over the last 12 months, with its components mixed. The natural gas index has risen 5.8 percent over the span and the electricity index has increased 2.8 percent. However, the gasoline index has declined 3.6 percent and the fuel oil index has fallen 3.2 percent.

All items less food and energy

The index for all items less food and energy rose 0.1 percent in September after being unchanged in August. The shelter index accounted for most of the increase, rising 0.3 percent in September. The rent index increased 0.3 percent and the index for owners’ equivalent rent rose 0.2 percent. The medical care index also advanced in September, increasing 0.2 percent. Within the medical care component, the index for medical care commodities rose 0.5 percent, with the nonprescription drugs index increasing 1.5 percent. The index for medical care services rose 0.1 percent, with the index for hospital services advancing 0.3 percent. The indexes for alcoholic beverages and for personal care both rose 0.1 percent in September. Several indexes were unchanged in September, including those for new vehicles, apparel, recreation, and household furnishings and operations. The index for airline fares continued to decline in September, falling 0.5 percent, and the indexes for used cars and trucks and for tobacco both fell 0.1 percent.

The index for all items less food and energy has risen 1.7 percent over the last 12 months. The shelter index has risen 3.0 percent and the index for medical care has increased 2.0 percent. Indexes that have declined over the last year include airline fares (down 3.0 percent), household furnishings and operations (down 1.4 percent) and used cars and trucks (down 0.4 percent).

Not seasonally adjusted CPI measures

The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.7 percent over the last 12 months to an index level of 238.031 (1982-84=100). For the month, the index rose 0.1 percent prior to seasonal adjustment.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 1.6 percent over the last 12 months to an index level of 234.170 (1982-84=100). For the month, the index rose 0.1 percent prior to seasonal adjustment.

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) increased 1.5 percent over the last 12 months. For the month, the index rose 0.1 percent on a not seasonally adjusted basis. Please note that the indexes for the post-2012 period are subject to revision.

Chained Consumer Price Index to be Revised Quarterly

Effective with the release of CPI data for January 2015 on February 26, 2015, the Bureau of Labor Statistics will begin quarterly revisions of the Chained Consumer Price Index for All Urban Consumers (C-CPI-U). In addition, a Constant Elasticity of Substitution (CES) formula will replace the geometric mean formula for the calculation of Initial and Interim C-CPI-U indexes.

More frequent weight updates and index revisions. Whereas CPI-U and CPI-W indexes are considered final when released, the final C-CPI-U index is published with a lag for administration and processing of Consumer Expenditure Survey household data, the source of the final C-CPI-U monthly expenditure weights. Under the traditional annual revision process, the final C-CPI-U index was published 13 to 24 months after the CPI-U. The CPI program is implementing a new estimation system that calculates monthly expenditure weights and revised C-CPI-U indexes on a quarterly basis. Under the new quarterly process, the final C-CPI-U index will lag the CPI-U index by 10 to 12 months.

Final C-CPI-U indexes for 2014 will be published on the following quarterly schedule:

Index Month Release Month January 2013 – March 2014 February 2015 April – June 2014 May 2015 July – September 2014 August 2015 October – December 2014 November 2015

Initial C-CPI-U indexes will continue to be released concurrent with the CPI-U release, and will be updated as interim C-CPI-U indexes with every quarterly revision until the final version is published.

New formula for initial and interim C-CPI-U Indexes. The CES formula will replace the geometric mean formula for initial and interim C-CPI-U indexes effective with the February 26, 2015 release. The CES formula is an improvement over the geometric mean formula because the CES formula more closely models consumer substitution behavior.

With the use of the geometric mean formula, consumers are assumed to consistently substitute within item classification to goods whose prices are falling relative to others. Using a fixed quantity formula, such as a Laspeyres formula, consumers are assumed to make no substitutions between goods when faced with relative price change. In reality, consumers respond to relative price changes differently than either model implies. The CES formula attempts to capture the amount of substitution occurring in the marketplace as consumers respond to changing relative prices.

For further details on the implementation of the CES formula and the frequency of weight updates for the C-CPI-U, please contact the CPI Information and Analysis section at (202)691-6966.

New Estimation System

Effective with the release of the January 2015 CPI on February 26, 2015, the Bureau of Labor Statistics will utilize a new estimation system for the Consumer Price Index. The new estimation system, the first major improvement to the existing system in over 25 years, is a redesigned, state-of-the-art system with improved flexibility and review capabilities. For more information on this new system, please see http://www.bls.gov/cpi/cpinewest.htm

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.