Each year, with the release of the January CPI, seasonal adjustment factors are recalculated to reflect price movements from the just-completed calendar year. This routine recalculation may result in revisions to seasonally adjusted indexes for the previous five years.
Basic information on the use of seasonal adjustment may be found in our Fact Sheet on Seasonal Adjustment.
For a more technical discussion of seasonal adjustment methodology, see the following excerpts from the BLS Handbook of Methods:
See also the Timeline of Seasonal Adjustment Methodological Changes
The Consumer Price Index (CPI) produces both unadjusted and seasonally adjusted data. Seasonally adjusted data are computed using seasonal factors derived by the X-13ARIMA-SEATS Seasonal Adjustment Method. These factors are updated each January, and the new factors are used to revise the previous five years of seasonally adjusted data. For more information on data revisions and exceptions to the usual revision schedule, please see the Fact Sheet on Seasonal Adjustment (http://www.bls.gov/cpi/cpisaqanda.htm) and the Timeline of Seasonal Adjustment Methodological Changes (http://www.bls.gov/cpi/cpiseastimeline.htm).
For analyzing short-term 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 yearsuch as price movements resulting from changing climatic conditions, production cycles, model changeovers, holidays, and sales. This allows data users to focus on changes that are not typical for the time of year..
The unadjusted data are of primary interest to consumers concerned about the prices they actually pay. Unadjusted data are also 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. BLS advises against the use of seasonally adjusted data in escalation agreements because seasonally adjusted series are revised annually..
The Bureau of Labor Statistics uses Intervention Analysis Seasonal Adjustment for some CPI series. Sometimes extreme values or sharp movements can distort the underlying seasonal pattern of price change. Intervention Analysis Seasonal Adjustment is a process by which the distortions caused by such unusual events are estimated and removed from the data prior to calculation of seasonal factors. The resulting seasonal factors, which more accurately represent the seasonal pattern, are then applied to the unadjusted data.
For the seasonal factors introduced in January 2015, BLS adjusted 33 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 the response in crude oil markets to the worldwide economic downturn in 2008. For a complete list of series that used Intervention Analysis Seasonal Adjustment, see Intervention Analysis in Seasonal Adjustment (http://www.bls.gov/cpi/cpisaia15.pdf).
Seasonally adjusted data, including the U.S. city average All items index levels, are subject to revision for up to five years after their original release. Every year, economists in the CPI calculate new seasonal factors for seasonally adjusted series and apply them to the last five years of data. Seasonally adjusted indexes beyond the last five years of data are considered to be final and not subject to revision. In January 2015, revised seasonal factors and seasonally adjusted indexes for 2009-2014 were calculated and published. For directly adjusted series, the seasonal factors for 2014 will be applied to data for 2015 to produce the seasonally adjusted 2015 indexes.
Each year the seasonal status of every series is reevaluated based upon certain statistical criteria. Using these criteria, BLS economists determine whether a series should change its status: from "not seasonally adjusted" to "seasonally adjusted", or vice versa. If any of the 82 components of the U.S. city average all items index 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 five years, but the seasonally adjusted indexes before that period will not be changed. 32 of the 82 components of the U.S. city average all items index are not seasonally adjusted for 2015.
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 Justin Yarros or Samuel An at (202) 691-6968 or by e-mail at Yarros.Justin@bls.gov or An.Samuel@bls.gov. If you have general questions about the CPI, please call our information staff at (202) 691-7000.
Last Modified Date: February 1, 2016