Economic News Release

Consumer Price Index Summary

 Transmission of material in this release is embargoed until                                        
 8:30 a.m. (EST) Thursday, November 20, 2014    USDL-14-2106

 Technical information: (202) 691-7000
 Media Contact:         (202) 691-5902 


 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. 

 Table A. Percent changes in CPI for All Urban Consumers (CPI-U): U.S. city
                                  Seasonally adjusted changes from             
                                          preceding month                      
                              Apr.  May   June  July  Aug.  Sep.  Oct.   ended 
                              2014  2014  2014  2014  2014  2014  2014   Oct.  

 All items..................    .3    .4    .3    .1   -.2    .1    .0      1.7
  Food......................    .4    .5    .1    .4    .2    .3    .1      3.1
   Food at home.............    .4    .7    .0    .4    .2    .3    .1      3.3
   Food away from home (1)..    .3    .2    .2    .3    .2    .3    .2      2.8
  Energy....................    .3    .9   1.6   -.3  -2.6   -.7  -1.9     -1.6
   Energy commodities.......   1.9    .6   3.0   -.3  -3.9  -1.1  -3.0     -4.9
    Gasoline (all types)....   2.3    .7   3.3   -.3  -4.1  -1.0  -3.0     -5.0
    Fuel oil (1)............  -3.0  -1.4  -1.7   -.7  -1.2  -2.1  -4.0     -6.5
   Energy services..........  -1.9   1.4   -.4   -.4   -.6   -.2   -.2      3.2
    Electricity.............  -2.6   2.3    .2   -.3    .1   -.7    .5      3.1
    Utility (piped) gas                                                        
       service..............    .3  -1.7  -2.6   -.4  -2.8   1.6  -2.7      3.4
  All items less food and                                                      
     energy.................    .2    .3    .1    .1    .0    .1    .2      1.8
   Commodities less food and                                                   
      energy commodities....    .1    .1    .1    .0   -.1    .0    .0      -.2
    New vehicles............    .3    .2   -.3    .3    .2    .0    .2       .6
    Used cars and trucks....    .5   -.1   -.4   -.3   -.3   -.1   -.9     -1.7
    Apparel.................    .0    .3    .5    .2   -.2    .0   -.2       .7
    Medical care commodities    .3    .5    .7    .3   -.1    .5    .0      2.6
   Services less energy                                                        
      services..............    .3    .3    .1    .1    .0    .2    .3      2.5
    Shelter.................    .2    .3    .2    .3    .2    .3    .2      3.0
    Transportation services     .7   1.0    .1   -.7   -.6    .1    .8      1.8
    Medical care services...    .3    .3    .0    .1    .0    .1    .2      1.9

   1 Not seasonally adjusted.

 Consumer Price Index Data for October 2014


 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. 


 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

 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. 

 The Consumer Price Index for November 2014 is scheduled to be released on Wednesday,
 December 17, 2014, at 8:30 a.m. (EST). 

 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

 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

 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 28 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 covers
 approximately 89 percent of the total population and includes, 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 each month in 87 urban areas
 across the country from about 4,000 housing units and approximately 26,000 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. 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 116.500. 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 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 0.04 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 0.08 percent of the 1 month percentage change based on all retail prices.  For
 example, 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 0.12 and 0.28 percent. For the latest data, including information on how to use the
 estimates of standard error, see "Variance Estimates for Price Changes in the Consumer Price
 Index, January-December 2013".  These data are available on the CPI home page
 (, or by using the following link:   

 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

 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-13ARIMA-SEATS Seasonal Adjustment Method.  Seasonally adjusted indexes and seasonal factors
 are computed annually.  Each year, the last five years of seasonally adjusted data are
 revised. Data from January 2009 through December 2013 were replaced in January 2014.
  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.

 Effective with the publication of data from January 2006 through December 2010 in January
 2011, the Video and audio series and the Information technology, hardware and services series
 were changed from independently adjusted to dependently adjusted. This resulted in an increase
 in the number of seasonal components used in deriving seasonal movement of the All items and
 64 other lower level aggregations, from 73 for the publication of January 1998 through December
 2005 data to 82 for the publication of seasonally adjusted data for January 2006 and later.
 Each year the seasonal status of every series is reevaluated based upon certain statistical
 criteria. If any of the 82 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 five years, but the seasonally adjusted
 indexes before that period will not be changed. Note: 35 of the 82 components are not
 seasonally adjusted for 2014.

 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. In 2014, for the 2009-2013
 revisions, the Bureau of Labor Statistics began using X-13ARIMA-SEATS to perform the seasonal
 adjustment of CPI series, including Intervention Analysis Seasonal Adjustment for certain series.

 For the seasonal factors introduced in January 2014, BLS adjusted 31 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 Intervention Analysis Seasonal Adjustment series and explanations, please
 refer to the article "Intervention Analysis Seasonal Adjustment", located on our website at  

 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
 Chris Graci at (202) 691-5826, or by e-mail at, or contact Carlyle
 Jackson at (202) 691-6984, or by e-mail at . If you have general questions
 about the CPI, please call our information staff at (202) 691-7000.  

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Last Modified Date: November 20, 2014
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