Consumer Price Index

How BLS Measures Price Change for Household Fuels in the Consumer Price Index

The Consumer Price Index for Household Fuels is a component of the Fuels and Utilities index, which is in the Housing major group of the Consumer Price Index (CPI). The household fuels index measures the price movement of residential energy items used for heating, cooling, lighting, cooking, and other appliances and household equipment. Together with the index for motor fuels, it makes up the special index for Energy.

Each month, the Bureau of Labor Statistics (BLS) publishes indexes, both seasonally adjusted and not seasonally adjusted, at the U.S. level for the following aggregates and items:

In addition, BLS publishes not seasonally adjusted monthly indexes for areas grouped by population size-classes, regions, region/size-classes, and for 14 'A-size' metropolitan areas:

Using the same collected data supporting production of the indexes BLS calculates and publishes average price series for the price:

All these average price series are published for the Urban U.S., the area-size-classes, the Census regions, the region/size-classes, and when there is sufficient sample for 14 'A-size' metropolitan areas.

Relative Importance

The relative importance of a CPI component is the percent its expenditure weight is relative to the total expenditure weight of all items in the Consumer Price Index, based on household expenditure data reported for a two-year reference period in the Continuing Consumer Expenditure Survey. As of December 2007, the relative importance of the individual items that comprise the Household Fuels Index within the U.S. city average of the CPI for All Urban Consumers (CPI-U), are as follows:

Item

Relative Importance

Household energy 4.215
Fuel oil .239
Propane, kerosene, firewood .113
Electricity 2.766
Utility (piped) gas 1.098

Sample Selection

The current sample of outlets priced for Fuel Oil and Other Household Fuels are selected from the Point-of-Purchase Survey (POPS) and one-fourth of the sample is updated each year. The POPS is a household survey that identifies outlets where specific items are purchased and how much was spent in each reported outlet where such items were purchased.

The current sample of outlets for Electricity and for Utility (piped) gas is selected from a sampling frame constructed from the Consumer Expenditure Survey data. Respondents to this survey report the name of the company from which they purchase their household energy, the monthly dollar amount of their purchases, and the total units of energy purchased.

BLS uses probability procedures to obtain the specific consumption amounts to price over time. For Electricity and for Utility (piped) gas the amounts were based on the monthly bills reported on the Consumer Expenditure Survey. For Fuel oil and Other household fuels BLS data collectors used probability methods to select consumption amounts based on information the sampled outlets provide.

Probability sampling methods are also used to select the specific detailed characteristics associated with the consumption amounts identified for pricing. For Electricity and for Utility (piped) gas, characteristics selected include type of rate schedule (general residential, heating, non heating, air conditioning, hot water heating, etc.), appropriate discounts, applicable tax jurisdictions, other unique billing conditions (peak/off-peak usage), and price determining characteristics which affect the price for the assigned consumption amounts.

Price Collection

Once the sample has been selected and initiated, BLS field staff price it monthly by visiting and/or calling respondents to obtain current price and item characteristic information in order to track price movements.

For Electricity and for Utility (piped) gas service, data are collected on the following items:

The prices for Electricity and for Utility (piped) gas service include seasonal changes, such as going from summer to winter rates. Also included are additional charges and credits, such as purchase fuel adjustments.

Item

Number of Quotes

Electricity 1,493
Utility (piped) gas service 1,424
Fuel oil 321
Other household fuels 574

Sampling errors associated with household fuel categories and other CPI components can be found at www.bls.gov/cpi/cpivar2008.pdf.

Additional information

Additional information on the Consumer Price Index can be found in the BLS Handbook of Methods, chapter 17, "The Consumer Price Index," Bulletin 2490 (1997). This chapter is also available on the BLS Internet site (http://www.bls.gov) under the topic "Publications," or you may call the Information and Analysis Section of the CPI at (202) 691-7000.

Last Modified Date: August 19, 2009