October 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) was unchanged in October 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.

Gasoline and other energy indexes declined, offsetting increases in shelter and an array of other indexes to leave the seasonally adjusted all items index unchanged. The gasoline index fell for the fourth month in a row, declining 3.0 percent, and the indexes for natural gas and fuel oil also decreased. The food index rose slightly in October, with major grocery store food groups mixed.

The index for all items less food and energy increased 0.2 percent in October. Besides the shelter index, airline fares, household furnishings and operations, medical care, recreation, personal care, tobacco, and new vehicles were among the indexes that increased. The indexes for used cars and trucks and for apparel declined in October.

The all items index increased 1.7 percent over the last 12 months, the same increase as for the 12 months ending September. The index for all items less food and energy increased 1.8 percent over the span, and the food index rose 3.1 percent. In contrast, the energy index declined 1.6 percent over the last 12 months.

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

Consumer Price Index Data for October 2014

Food

The food index rose 0.1 percent in October, its smallest increase since June. The index for food at home also rose 0.1 percent, with four of the six major grocery store food groups posting increases. The fruits and vegetables index rose the most, increasing 0.9 percent in October after rising 0.1 percent in September. The index for nonalcoholic beverages rose 0.6 percent, its largest increase since September 2012. The index for dairy and related products increased 0.5 percent, and the cereals and bakery products index rose 0.3 percent. In contrast to these increases, the index for meats, poultry, fish, and eggs, which had been rising sharply in recent months, declined 0.4 percent. The beef and veal index rose 0.3 percent, but the indexes for pork, poultry, and eggs all declined. The index for other food at home also fell 0.4 percent in October. The index for food at home has risen 3.3 percent over the last 12 months, the largest 12-month increase since April 2012. All six major grocery store food groups increased over the span. The index for food away from home rose 0.2 percent in October and has increased 2.8 percent over the last 12 months.

Energy

The energy index fell 1.9 percent in October, its fourth consecutive decline. The gasoline index declined 3.0 percent in October and has fallen 8.0 percent over the last 3 months. (Before seasonal adjustment, gasoline prices fell 6.3 percent in October.) The index for natural gas also declined in October, falling 2.7 percent after rising in September. The fuel oil index decreased as well, falling 4.0 percent. In contrast to these declines, the index for electricity rose in October, increasing 0.5 percent after declining in September. The energy index has fallen 1.6 percent over the last 12 months. The fuel oil index has declined 6.5 percent and the gasoline index has fallen 5.0 percent. However, the index for natural gas has increased 3.4 percent and the electricity index has advanced 3.1 percent.

All items less food and energy

The index for all items less food and energy rose 0.2 percent in October after increasing 0.1 percent in September. The shelter index, which rose 0.3 percent in September, increased 0.2 percent in October. The indexes for rent and for owners' equivalent rent both rose 0.2 percent, while the index for lodging away from home rose 0.7 percent. The index for household furnishings and operations rose 0.4 percent in October, its largest increase since November 2012. The index for airline fares turned up, rising 2.4 percent in October after declining sharply in recent months. The medical care index increased 0.2 percent in October, with the index for prescription drugs increasing 0.7 percent and the hospital services index advancing 0.2 percent. The recreation index rose 0.2 percent, as did the new vehicles index. Also rising were the indexes for personal care, which increased 0.3 percent, and tobacco, which rose 0.6 percent after declining in September. In contrast to these increases, the index for used cars and trucks fell 0.9 percent in October, its sixth consecutive decline. The apparel index also fell, declining 0.2 percent.

The index for all items less food and energy has risen 1.8 percent over the last 12 months. This is slightly below its average annualized increase over the past 10 years of 1.9 percent. The shelter index has risen 3.0 percent over the last 12 months, and the medical care index has increased 2.1 percent. In contrast, the index for airline fares has decreased 2.8 percent and the index for used cars and trucks has fallen 1.7 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 237.433 (1982-84=100). For the month, the index fell 0.3 percent prior to seasonal adjustment.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 1.5 percent over the last 12 months to an index level of 233.229 (1982-84=100). For the month, the index fell 0.4 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 fell 0.3 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.