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CONSUMER PRICE INDEX: OCTOBER 2008
The Consumer Price Index for All Urban Consumers (CPI-U) decreased
1.0 percent in October, before seasonal adjustment, the Bureau of Labor
Statistics of the U.S. Department of Labor reported today. The October
level of 216.573 (1982-84=100) was 3.7 percent higher than in October
2007.
The Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W) decreased 1.3 percent in October, prior to seasonal adjustment.
The October level of 212.182 (1982-84=100) was 3.8 percent higher than in
October 2007.
The Chained Consumer Price Index for All Urban Consumers (C-CPI-U)
decreased 0.8 percent in October on a not seasonally adjusted basis. The
October level of 124.784 (December 1999=100) was 3.3 percent higher than
in October 2007. Please note that the indexes for the post-2006 period
are subject to revision.
CPI for All Urban Consumers (CPI-U)
On a seasonally adjusted basis, the CPI-U decreased 1.0 percent in
October following very little change in September and August. The large
October decline was the largest one month decrease since publication of
seasonally adjusted changes began in February 1947. Compared to a year
ago, the October index was up 3.7 percent. The energy index fell 8.6
percent in October following declines of 1.9 percent in September and 3.1
percent in August. Motor fuel prices continued to decline in October,
with the gasoline index falling 14.2 percent. Despite the decline,
gasoline prices remain 12.0 percent above their October 2007 level. The
index for household energy items declined 0.9 percent following a 3.4
percent decrease in September. Petroleum based household fuel prices
continued to decline, but the October decreases were moderated by an
increase in the electricity index. The food index increased 0.3 percent
in October, a smaller advance than the average monthly increase of 0.7
percent during the June through September period. Compared with a year
earlier, the food index was up 6.3 percent. The index for all items less
food and energy turned down in October, (cont.)
Table A. Percent changes in CPI for All Urban Consumers (CPI-U)
Seasonally adjusted
Expenditure Compound
Category Changes from preceding month annual Un-
rate adjusted
3-mos. 12-mos.
Apr. May June July Aug. Sep. Oct. ended ended
2008 2008 2008 2008 2008 2008 2008 Oct. 2008 Oct. 2008
All items.......... .2 .6 1.1 .8 -.1 .0 -1.0 -4.4 3.7
Food and beverages .9 .3 .7 .9 .6 .6 .3 5.7 6.1
Housing........... .3 .5 .5 .6 -.1 -.1 .0 -.9 3.2
Apparel........... .5 -.3 .1 1.2 .5 -.1 -1.0 -2.4 .3
Transportation.... -.7 2.0 3.8 1.7 -1.5 -.6 -5.4 -26.2 4.2
Medical care...... .2 .2 .2 .1 .2 .3 .2 2.9 2.8
Recreation........ -.1 .1 .1 .4 .5 .2 .1 3.4 2.2
Education and
communication.. .4 .4 .5 .5 .2 .1 .2 2.1 3.4
Other goods and
services....... .5 .4 .4 .4 .2 .2 .3 2.9 4.1
Special indexes:
Energy............ .0 4.4 6.6 4.0 -3.1 -1.9 -8.6 -43.1 11.5
Food.............. .9 .3 .8 .9 .6 .6 .3 5.8 6.3
All items less
food and energy .1 .2 .3 .3 .2 .1 -.1 1.1 2.2
declining 0.1 percent to a level 2.2 percent above October 2007.
Contributing to the decrease in October were declines of 1.0 percent in
the apparel index, 4.8 percent in the airline fare index, 1.6 percent in
the index for lodging away from home, and 0.7 percent in the index for new
and used motor vehicles.
The food and beverages index rose 0.3 percent in October after a 0.6
percent increase in September. The index for food at home increased
0.1 percent in October after increasing at least 0.6 percent in each of
the preceding four months. Five of the six grocery store food groups
decelerated in October. The fruits and vegetables index declined 2.2
percent in October after a 0.5 percent decrease in September. The index
for dairy and related products also registered a larger decline, falling
1.0 percent in October after a 0.6 percent decline in September. The
indexes for cereals and bakery products, for meats, poultry, fish and
eggs, and for other food at home all rose more slowly in October than
September. All three indexes rose 0.6 percent in October after increases
in September of 1.1, 1.0, and 1.1 percent, respectively. Nonalcoholic
beverages and beverage materials was the only major grocery store food
group to increase more rapidly in October, increasing 1.2 percent after a
0.7 percent increase in September. The other indexes in the food and
beverages group, food away from home and alcoholic beverages, rose 0.5
percent and 0.4 percent in October, respectively.
The housing index was virtually unchanged in October after declining
0.1 percent in September. The shelter index, which rose 0.3 percent in
September, was virtually unchanged in October. Within shelter, the index
for rent of primary residence rose 0.4 percent in October after a 0.3
percent increase in September. The index for owners' equivalent rent,
which increased 0.2 percent in September, rose 0.1 percent in October.
The lodging away from home index turned down sharply in October, falling
1.6 percent after a 0.9 percent increase in September. (On a not
seasonally adjusted basis, the index for lodging away from home fell 1.7
percent in October and was 1.4 percent below its October 2007 level). The
household energy index declined 0.9 percent in October as declines in the
fuel oil and natural gas indexes more than offset an increase in the
electricity index. The index for household furnishings and operation was
virtually unchanged in October after rising 0.5 percent in September.
The transportation index declined sharply in October, falling 5.4
percent as several major components of the index declined significantly.
The motor fuels index fell 13.9 percent in October after declining 0.8
percent in September. (Prior to seasonal adjustment, motor fuel prices
fell 14.8 percent in October but were 12.3 percent higher than in October
2007). The index for new and used motor vehicles declined for the third
straight month, falling 0.7 percent in October. The new vehicles index
declined 0.5 percent in October. (Prior to seasonal adjustment, new
vehicle prices fell 0.1 percent and have declined 2.3 percent since
October 2007.) The index for used cars and trucks declined 2.4 percent in
October after a 1.8 percent decrease in September. The index for public
transportation declined 3.3 percent in October as the airline fare index
fell 4.8 percent. (Prior to seasonal adjustment, airline fares fell 4.4
percent but are 10.4 percent higher than in October 2007.)
The index for apparel fell 1.0 percent in October following a 0.1
percent decline in September. (Prior to seasonal adjustment, apparel
prices rose 0.9 percent in October and were 0.3 percent higher than in
October 2007.)
The medical care index rose 0.2 percent in October after rising 0.3
percent in September, and was 2.8 percent higher than a year ago. The
index for medical care commodities--prescription drugs, nonprescription
drugs, and medical supplies-and the index for medical care services each
increased 0.2 percent in October. Within the latter group, the index for
physicians' services rose 0.1 percent and the index for hospital and
related services increased 0.4 percent.
The index for recreation advanced 0.1 percent in October, following a
0.2 percent increase in September. The index for video and audio declined
0.6 percent in October, while the index for photography declined 0.8
percent and the index for toys fell 0.5 percent. The indexes for pets and
pet products and services and for sporting goods increased substantially
in October, rising 0.9 percent and 1.5 percent, respectively.
The index for education and communication rose 0.2 percent in October
after a 0.1 percent increase in September. The index for education rose
0.4 percent in October, the same increase as in September. The index for
communication was virtually unchanged in October after declining 0.2
percent in September. Within communication, the index for telephone
services rose 0.1 percent while the index for information technology,
hardware and services declined 0.3 percent.
The index for other goods and services rose 0.3 percent in October
following a 0.2 percent increase in September. The index for tobacco and
smoking products rose 0.4 percent in October after being virtually
unchanged in September, while the index for personal care, which rose 0.3
percent in September, advanced 0.2 percent in October.
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 1.2 percent in October.
Table B. Percent changes in CPI for Urban Wage Earners and
Clerical Workers (CPI-W)
Seasonally adjusted
Expenditure Compound
Category Changes from preceding month annual Un-
rate adjusted
3-mos. 12-mos.
Apr. May June July Aug. Sep. Oct. ended ended
2008 2008 2008 2008 2008 2008 2008 Oct. 2008 Oct. 2008
All items.......... .2 .7 1.2 .9 -.2 -.1 -1.2 -5.7 3.8
Food and beverages .9 .3 .8 .9 .6 .6 .3 5.9 6.2
Housing........... .4 .5 .5 .7 .0 -.2 .0 -.7 3.5
Apparel........... .2 -.2 .0 .8 1.0 .0 -1.2 -.9 .3
Transportation.... -.7 2.1 4.0 1.8 -1.7 -.7 -6.0 -28.9 4.1
Medical care...... .2 .1 .2 .1 .3 .3 .1 3.1 2.9
Recreation........ -.2 .0 .2 .4 .5 .2 .0 3.1 2.0
Education and
communication.. .4 .3 .5 .5 .2 .0 .2 1.9 3.1
Other goods and
services....... .4 .5 .6 .5 .2 .2 .3 2.7 4.5
Special indexes:
Energy............ -.2 4.5 6.8 4.0 -3.2 -1.7 -9.0 -43.7 11.7
Food.............. 1.0 .3 .8 .9 .6 .6 .3 6.0 6.4
All items less
food and energy .1 .2 .3 .3 .2 .1 -.1 1.0 2.1
Consumer Price Index data for November are scheduled for release on
Tuesday, December 16, 2008, at 8:30 A.M. (EST).
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.
Brief Explanation of the CPI
The Consumer Price Index (CPI) is a measure of the average change in
prices over time of goods and services purchased by households. The
Bureau of Labor Statistics publishes CPIs for two population groups: (1)
the CPI for Urban Wage Earners and Clerical Workers (CPI-W), which covers
households of wage earners and clerical workers that comprise
approximately 32 percent of the total population and (2) the CPI for All
Urban Consumers (CPI-U) and the Chained CPI for All Urban Consumers (C-CPI-
U), which cover approximately 87 percent of the total population and
include in addition to wage earners and clerical worker households, groups
such as professional, managerial, and technical workers, the self-
employed, short-term workers, the unemployed, and retirees and others not
in the labor force.
The CPIs are based on prices of food, clothing, shelter, and fuels,
transportation fares, charges for doctors' and dentists' services, drugs,
and other goods and services that people buy for day-to-day living.
Prices are collected in 87 urban areas across the country from about
50,000 housing units and approximately 23,000 retail establishments-
department stores, supermarkets, hospitals, filling stations, and other
types of stores and service establishments. All taxes directly associated
with the purchase and use of items are included in the index. Prices of
fuels and a few other items are obtained every month in all 87 locations.
Prices of most other commodities and services are collected every month in
the three largest geographic areas and every other month in other areas.
Prices of most goods and services are obtained by personal visits or
telephone calls of the Bureau's trained representatives.
In calculating the index, price changes for the various items in each
location are averaged together with weights, which represent their
importance in the spending of the appropriate population group. Local
data are then combined to obtain a U.S. city average. For the CPI-U and
CPI-W separate indexes are also published by size of city, by region of
the country, for cross-classifications of regions and population-size
classes, and for 27 local areas. Area indexes do not measure differences
in the level of prices among cities; they only measure the average change
in prices for each area since the base period. For the C-CPI-U data are
issued only at the national level. It is important to note that the CPI-U
and CPI-W are considered final when released, but the C-CPI-U is issued in
preliminary form and subject to two annual revisions.
The index measures price change from a designed reference date. For
the CPI-U and the CPI-W the reference base is 1982-84 equals 100.0. The
reference base for the C-CPI-U is December 1999 equals 100.
An increase of 16.5 percent from the reference base, for example, is shown
as 116.5. This change can also be expressed in dollars as follows: the
price of a base period market basket of goods and services in the CPI has
risen from $10 in 1982-84 to $11.65.
For further details visit the CPI home page on the Internet at
http://www.bls.gov/cpi/ or contact our CPI Information and Analysis
Section on (202) 691-7000.
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
Calculating Index Changes
Movements of the indexes from one month to another are usually
expressed as percent changes rather than changes in index points, because
index point changes are affected by the level of the index in relation to
its
base period while percent changes are not. The example below illustrates
the computation of index point and percent changes.
Percent changes for 3-month and 6-month periods are expressed as
annual rates and are computed according to the standard formula for
compound growth rates. These data indicate what the percent change would
be if the current rate were maintained for a 12-month period.
Index Point Change
CPI
202.416
Less previous index
201.800
Equals index point change
.616
Percent Change
Index point difference
.616
Divided by the previous index
201.800
Equals
0.003
Results multiplied by one hundred
0.003x100
Equals percent change
0.3
Regions Defined
The states in the four regions shown in Tables 3 and 6 are listed below.
The Northeast--Connecticut, Maine, Massachusetts, New Hampshire, New York,
New Jersey, Pennsylvania, Rhode Island, and Vermont.
The Midwest--Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota,
Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin.
The South--Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky,
Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South
Carolina, Tennessee, Texas, Virginia, West Virginia, and the District of
Columbia.
The West--Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana,
Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.
A Note on Seasonally Adjusted and Unadjusted Data
Because price data are used for different purposes by different
groups, the Bureau of Labor Statistics publishes seasonally adjusted as
well as unadjusted changes each month.
For analyzing general price trends in the economy, seasonally
adjusted changes are usually preferred since they eliminate the effect of
changes that normally occur at the same time and in about the same
magnitude every year--such as price movements resulting from changing
climatic conditions, production cycles, model changeovers, holidays, and
sales.
The unadjusted data are of primary interest to consumers concerned
about the prices they actually pay. Unadjusted data also are used
extensively for escalation purposes. Many collective bargaining contract
agreements and pension plans, for example, tie compensation changes to the
Consumer Price Index before adjustment for seasonal variation.
Seasonal factors used in computing the seasonally adjusted indexes
are derived by the X-12-ARIMA Seasonal Adjustment Method. Seasonally
adjusted indexes and seasonal factors are computed annually. Each year,
the last 5 years of seasonally adjusted data are revised. Data from
January 2003 through December 2007 were replaced in January 2008.
Exceptions to the usual revision schedule were: the updated seasonal data
at the end of 1977 replaced data from 1967 through 1977; and, in January
2002, dependently seasonally adjusted series were revised for January 1987-
December 2001 as a result of a change in the aggregation weights for
dependently adjusted series. For further information, please see
"Aggregation of Dependently Adjusted Seasonally Adjusted Series," in the
October 2001 issue of the CPI Detailed Report.
The seasonal movement of All items and 54 other aggregations is
derived by combining the seasonal movement of 73 selected components.
Each year the seasonal status of every series is reevaluated based upon
certain statistical criteria. If any of the 73 components change their
seasonal adjustment status from seasonally adjusted to not seasonally
adjusted, not seasonally adjusted data will be used in the aggregation of
the dependent series for the last 5 years, but the seasonally adjusted
indexes will be used before that period. Note: 48 of the 73 components
are seasonally adjusted for 2008.
Seasonally adjusted data, including the All items index levels, are
subject to revision for up to five years after their original release.
For this reason, BLS advises against the use of these data in escalation
agreements.
Effective with the calculation of the seasonal factors for 1990, the
Bureau of Labor Statistics has used an enhanced seasonal adjustment
procedure called Intervention Analysis Seasonal Adjustment for some CPI
series. Intervention Analysis Seasonal Adjustment allows for better
estimates of seasonally adjusted data. Extreme values and/or sharp
movements which might distort the seasonal pattern are estimated and
removed from the data prior to calculation of seasonal factors. Beginning
with the calculation of seasonal factors for 1996, X-12-ARIMA software was
used for Intervention Analysis Seasonal Adjustment.
For the seasonal factors introduced in January 2008, BLS adjusted 20
series using Intervention Analysis Seasonal Adjustment, including selected
food and beverage items, motor fuels, electricity and vehicles. For
example, this procedure was used for the Motor fuel series to offset the
effects of events such as damage to oil refineries from Hurricane Katrina.
For a complete list of Intervention Analysis Seasonal Adjustment
series and explanations, please refer to the article "Intervention
Analysis Seasonal Adjustment," located on our website at
http://www.bls.gov/cpi/cpisapage.htm.
For additional information on seasonal adjustment in the CPI, please
write to the Bureau of Labor Statistics, Division of Consumer Prices and
Price Indexes, Washington, DC 20212 or contact Jeff Wilson at (202) 691-
6968, or by e-mail at Wilson.Jeff@bls.gov. If you have general questions
about the CPI, please call our information staff at (202) 691-7000.
Bureau of Labor Statistics
