Economic News Release

Consumer Price Index Summary

 Transmission of material in this release is embargoed until                                        
 8:30 a.m. (EST) Thursday, February 26, 2015    USDL-15-0281

 Technical information: (202) 691-7000    Reed.Steve@bls.gov    www.bls.gov/cpi
 Media Contact:         (202) 691-5902    PressOffice@bls.gov 

 CONSUMER PRICE INDEX - JANUARY 2015
 
 The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.7 percent 
 in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics
 reported today. Over the last 12 months, the all items index decreased 0.1 
 percent before seasonal adjustment.

 The energy index fell 9.7 percent as the gasoline index fell 18.7 percent in 
 January, the sharpest in a series of seven consecutive declines. The gasoline 
 decrease was overwhelmingly the cause of the decline in the all items index, 
 which would have risen 0.1 percent had the gasoline index been unchanged. The 
 fuel oil index also fell sharply, and the index for natural gas turned down, 
 although the electricity index rose. The food index was unchanged in January, 
 with the food at home index falling for the first time since May 2013.

 The index for all items less food and energy rose 0.2 percent in January. The 
 shelter index rose 0.3 percent, and the indexes for personal care, for apparel,
 and for recreation increased as well. The medical care index was unchanged, 
 while an array of indexes declined in January, including those for household 
 furnishings and operations, alcoholic beverages, new vehicles, used cars and 
 trucks, airline fares, and tobacco.  

 The all items index declined 0.1 percent over the last 12 months, the first 
 negative 12-month change since the period ending October 2009. The energy 
 index fell 19.6 percent over the span, with the gasoline index down 35.4 
 percent. The food index rose 3.2 percent, and the index for all items less 
 food and energy increased 1.6 percent.   



 Table A. Percent changes in CPI for All Urban Consumers (CPI-U): U.S. city
 average
                                                                               
                                                                               
                                  Seasonally adjusted changes from             
                                          preceding month                      
                                                                          Un-  
                                                                       adjusted
                                                                        12-mos.
                              July  Aug.  Sep.  Oct.  Nov.  Dec.  Jan.   ended 
                              2014  2014  2014  2014  2014  2014  2015   Jan.  
                                                                         2015  
                                                                               
                                                                               
 All items..................    .1   -.1    .1    .1   -.3   -.3   -.7      -.1
  Food......................    .3    .3    .3    .2    .2    .2    .0      3.2
   Food at home.............    .3    .3    .3    .2    .1    .2   -.2      3.3
   Food away from home (1)..    .3    .2    .3    .2    .4    .3    .2      3.1
  Energy....................   -.2  -1.7   -.7  -1.2  -4.1  -4.7  -9.7    -19.6
   Energy commodities.......   -.4  -2.6   -.9  -2.1  -7.0  -9.0 -18.0    -34.7
    Gasoline (all types)....   -.4  -2.7   -.9  -2.0  -7.2  -9.2 -18.7    -35.4
    Fuel oil (1)............   -.7  -1.2  -2.1  -4.0  -3.5  -7.8  -9.9    -29.7
   Energy services..........    .2   -.3   -.4   -.1   -.3    .8   -.1      1.9
    Electricity.............    .2    .2   -.7    .5    .0    .6    .9      2.5
    Utility (piped) gas                                                        
       service..............    .0  -1.9    .4  -1.9  -1.3   1.4  -3.4      -.4
  All items less food and                                                      
     energy.................    .1    .1    .1    .2    .1    .1    .2      1.6
   Commodities less food and                                                   
      energy commodities....    .0   -.1    .1    .0   -.3   -.2   -.1      -.8
    New vehicles............    .3    .1    .0    .1    .0    .0   -.1       .5
    Used cars and trucks....   -.1    .0    .0   -.6   -.9   -.8   -.1     -4.0
    Apparel.................    .1   -.4    .1   -.3   -.7   -.8    .3     -1.4
    Medical care commodities    .3    .0    .5    .2    .6    .9   -.3      3.9
   Services less energy                                                        
      services..............    .1    .1    .2    .2    .2    .2    .3      2.5
    Shelter.................    .3    .2    .3    .2    .2    .2    .3      2.9
    Transportation services    -.6   -.3    .1    .5    .2    .0    .4      2.1
    Medical care services...    .1    .1    .1    .2    .3    .3    .1      2.3

   1 Not seasonally adjusted.


 Consumer Price Index Data for January 2015

 Food

 The food index was unchanged in January after rising through all of 2014. The 
 index for food at home turned down in January, falling 0.2 percent after 
 increasing in each of the last 6 months. Four of the six major grocery 
 store food groups declined in January. The fruits and vegetables index fell 
 0.9 percent, with the indexes for fresh fruits and fresh vegetables both 
 declining. The dairy and related products index also fell 0.9 percent, its 
 largest decline since April 2012. The index for meats, poultry, fish, and 
 eggs fell slightly in January, decreasing 0.1 percent despite the index for 
 beef and veal rising 0.1 percent. The index for other food at home, which 
 rose in November and December, also declined 0.1 percent in January. The food 
 at home index has increased 3.3 percent over the last 12 months, with all six 
 major grocery store food group indexes rising over that span. The largest 
 increase was posted by the meats, poultry, fish, and eggs group, which rose 
 8.7 percent with the beef and veal index increasing 19.0 percent.  The index 
 for food away from home increased 0.2 percent in January after a 0.3-percent 
 increase in December and has risen 3.1 percent over the last 12 months.

 Energy

 The energy index fell 9.7 percent in January, its seventh consecutive decline 
 and the largest 1-month decrease since November 2008. The 18.7-percent 
 decline in the gasoline index was the main factor. (Before seasonal 
 adjustment, gasoline prices fell 17.1 percent in January.) The fuel oil index 
 also fell sharply, declining 9.9 percent after a 7.8-percent decline in 
 December. The index for natural gas, which rose in December, fell 3.4 percent 
 in January. The electricity index was the only major energy component to 
 increase, rising 0.9 percent, its largest increase since May 2014. The 
 electricity index is also the only major energy component to rise over the 
 last 12 months, increasing 2.5 percent over the span. The gasoline and fuel 
 oil indexes have declined sharply over the period, falling 35.4 percent and 
 29.7 percent, respectively. The index for natural gas has declined slightly 
 over the span, decreasing 0.4 percent.  

 All items less food and energy

 The index for all items less food and energy increased 0.2 percent in January.
 The shelter index increased 0.3 percent, with the rent and owners' equivalent
 rent indexes both rising 0.2 percent and the index for lodging away from home
 rising 1.3 percent. The personal care index rose 0.6 percent in January, its 
 largest increase since the inception of the index in 1999. The apparel index 
 rose 0.3 percent, and the recreation index increased 0.2 percent. The index 
 for medical care was unchanged in January, with the index for medical care 
 services rising, but the medical care commodities index falling. Several 
 indexes posted modest declines in January. The index for household furnishings
 and operations fell 0.2 percent, and the indexes for new vehicles and for 
 used cars and trucks both fell 0.1 percent. The index for alcoholic beverages 
 fell 0.3 percent, as did the index for airline fares. The tobacco index also 
 declined, falling 0.2 percent after rising in December.     

 The index for all items less food and energy has risen 1.6 percent over the 
 past 12 months, the same figure as for the 12 months ending December. The 
 index for shelter has risen 2.9 percent over the span, and the indexes for 
 medical care, for new vehicles, and for alcoholic beverages are among those 
 that have also increased. Indexes that have declined over the past year 
 include those for used cars and trucks, airline fares, household furnishings 
 and operations, and apparel.   

 Not seasonally adjusted CPI measures

 The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.1 percent
 over the last 12 months to an index level of 233.707 (1982-84=100). For the 
 month, the index fell 0.5 percent prior to seasonal adjustment.  

 The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) 
 decreased 0.8 percent over the last 12 months to an index level of 228.294 
 (1982-84=100). For the month, the index fell 0.7 percent prior to seasonal 
 adjustment.  

 The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) decreased 
 0.6 percent over the last 12 months. For the month, the index fell 0.7 percent
 on a not seasonally adjusted basis. Please note that the indexes for the past
 10 to 12 months are subject to revision. 


	
 The Consumer Price Index for February 2015 is scheduled to be released on 
 Tuesday, March 24, 2015, at 8:30 a.m. (EDT). 





















 Chained Consumer Price Index to be Revised Quarterly 

 Effective with this release of CPI data for January 2015 on February 26, 2015, 
 the Bureau of Labor Statistics is beginning 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 this 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 this release of the January 2015 CPI on February 26, 2015, the 
 Bureau of Labor Statistics is utilizing 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.  

 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 
 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 0.04 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 
 (http://www.bls.gov/cpi), or by using the following link: 
 http://www.bls.gov/cpi/cpivar2013.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





 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 
 2010 through December 2014 were replaced in January 2015.  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: 32 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 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 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 Chris Graci at (202) 691-5826, or by e-mail 
 at graci.christopher@bls.gov or contact Carlyle Jackson at (202) 691-6984, or 
 by e-mail at jackson.carlyle@bls.gov .  If you have general questions about 
 the CPI, please call our information staff at (202) 691-7000.  


 





 Revised seasonally adjusted changes

 Over-the-month percent changes in the U.S. City Average Consumer Price Index 
 for All Urban Consumers (CPI-U) for All Items and for All Items less food and 
 energy, seasonally adjusted, using former and recalculated seasonal factors 
 for 2014.

 All Items

 2014		Former	Recalculated	Difference
 
 January	.1	.2		.1
 February	.1	.1		.0
 March		.2	.2		.0
 April		.3	.2	       -.1
 May		.4	.3	       -.1
 June		.3	.2	       -.1
 July		.1	.1		.0
 August	       -.2     -.1		.1
 September	.1	.1		.0
 October	.0	.1		.1
 November      -.3     -.3		.0
 December      -.4     -.3		.1
 

 All Items less food and energy

 2014		Former	Recalculated	Difference
 
 January	.1	.1		.0
 February	.1	.1		.0
 March		.2	.2		.0
 April		.2	.2		.0
 May		.3	.2	       -.1
 June		.1	.1		.0
 July		.1	.1		.0
 August		.0	.1		.1
 September	.1	.1		.0
 October	.2	.2		.0
 November	.1	.1		.0
 December	.0	.1		.1










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Last Modified Date: February 26, 2015
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