CONSUMER PRICE INDEX - FEBRUARY 2023
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in February on a seasonallyadjusted basis, after increasing 0.5 percent in January, the U.S. Bureau of Labor Statistics reportedtoday. Over the last 12 months, the all items index increased 6.0 percent before seasonal adjustment.
The index for shelter was the largest contributor to the monthly all items increase, accounting for over70 percent of the increase, with the indexes for food, recreation, and household furnishings andoperations also contributing. The food index increased 0.4 percent over the month with the food at homeindex rising 0.3 percent. The energy index decreased 0.6 percent over the month as the natural gas andfuel oil indexes both declined.
The index for all items less food and energy rose 0.5 percent in February, after rising 0.4 percent inJanuary. Categories which increased in February include shelter, recreation, household furnishings andoperations, and airline fares. The index for used cars and trucks and the index for medical care wereamong those that decreased over the month.
The all items index increased 6.0 percent for the 12 months ending February; this was the smallest12-month increase since the period ending September 2021. The all items less food and energy index rose5.5 percent over the last 12 months, its smallest 12-month increase since December 2021. The energyindex increased 5.2 percent for the 12 months ending February, and the food index increased 9.5 percentover the last year.
Food
The food index increased 0.4 percent in February, and the food at home index rose 0.3 percent over themonth. Five of the six major grocery store food group indexes increased over the month. The index fornonalcoholic beverages increased 1.0 percent in February, after a 0.4-percent increase the previousmonth. The indexes for other food at home and for cereals and bakery products each rose 0.3 percentover the month. The index for fruits and vegetables increased 0.2 percent in February, and the indexfor dairy and related products rose 0.1 percent.
In contrast, the meats, poultry, fish, and eggs index fell 0.1 percent over the month, the firstdecrease in that index since December 2021. The index for eggs fell 6.7 percent in February followingsharp increases in recent months.
The food away from home index rose 0.6 percent in February, as it did in January. The index for limitedservice meals increased 0.7 percent over the month and the index for full service meals increased 0.6percent.
The food at home index rose 10.2 percent over the last 12 months. The index for cereals and bakeryproducts rose 14.6 percent over the 12 months ending in February. The remaining major grocery storefood groups posted increases ranging from 5.3 percent (fruits and vegetables) to 12.4 percent (otherfood at home).
The index for food away from home rose 8.4 percent over the last year. The index for full service mealsrose 8.0 percent over the last 12 months, and the index for limited service meals rose 7.2 percent overthe same period.
Energy
The energy index fell 0.6 percent in February, after increasing 2.0 percent in January. The natural gasindex decreased 8.0 percent over the month, the largest 1-month decrease in that series since October2006. The fuel oil index fell 7.9 percent over the month, following a 1.2-percent decline in January.In contrast, the gasoline index rose 1.0 percent in February, following a 2.4-percent increase in theprevious month. (Before seasonal adjustment, gasoline prices rose 1.7 percent in February.) The indexfor electricity increased 0.5 percent over the month.
The energy index rose 5.2 percent over the past 12 months. The fuel oil index rose 9.2 percent over thelast 12 months, while the index for electricity rose 12.9 percent, and the index for natural gasincreased 14.3 percent over the same period. The gasoline index decreased 2.0 percent over the span.
All items less food and energy
The index for all items less food and energy rose 0.5 percent in February, after rising 0.4 percent inJanuary. The shelter index continued to increase, rising 0.8 percent over the month. The index for rentrose 0.8 percent in February, while the index for owners' equivalent rent increased 0.7 percent over themonth. The index for lodging away from home increased 2.3 percent in February.
The shelter index was the dominant factor in the monthly increase in the index for all items less foodand energy. Among the other indexes that rose in February was the index for recreation, which increased0.9 percent, and the index for household furnishings and operations which increased 0.8 percent. Theairline fares index rose 6.4 percent, ending a string of four consecutive declines. The index for motorvehicle insurance, the index for apparel, the index for personal care, and the index for new vehiclesalso increased in February. In contrast, the index for used cars and trucks fell 2.8 percent in February, continuing a recent downward trend.
The medical care index fell 0.5 percent in February, after falling 0.4 percent in January. The index forphysicians' services continued to decline, falling 0.5 percent after declining 0.1 percent in January.The hospital services index and the prescription drugs index were unchanged in February.
The index for all items less food and energy rose 5.5 percent over the past 12 months. The shelter indexincreased 8.1 percent over the last year, accounting for over 60 percent of the total increase in allitems less food and energy. Other indexes with notable increases over the last year include motorvehicle insurance (+14.5 percent), household furnishings and operations (+6.1 percent), recreation(+5.0 percent), and new vehicles (+5.8 percent).
The Consumer Price Index for All Urban Consumers (CPI-U) increased 6.0 percent over the last 12 monthsto an index level of 300.840 (1982-84=100). For the month, the index increased 0.6 percent prior toseasonal adjustment.
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 5.8 percent overthe last 12 months to an index level of 295.057 (1982-84=100). For the month, the index increased 0.5percent prior to seasonal adjustment.
The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) increased 6.2 percent over the last12 months. For the month, the index increased 0.6 percent on a not seasonally adjusted basis. Pleasenote that the indexes for the past 10 to 12 months are subject to revision.
The Consumer Price Index for March 2023 is scheduled to be released on Wednesday, April 12, 2023, at8:30 a.m. (ET).
Technical Note
Brief Explanation of the CPI
The Consumer Price Index (CPI) measures the change in prices paid by consumers for goods and services.The CPI reflects spending patterns for each of two population groups: all urban consumers and urbanwage earners and clerical workers. The all urban consumer group represents over 90 percent of thetotal U.S. population. It is based on the expenditures of almost all residents of urban or metropolitan areas, including professionals, the self-employed, the poor, the unemployed, and retiredpeople, as well as urban wage earners and clerical workers. Not included in the CPI are the spending patterns of people living in rural nonmetropolitan areas, farming families, people in the Armed Forces,and those in institutions, such as prisons and mental hospitals. Consumer inflation for all urbanconsumers is measured by two indexes, namely, the Consumer Price Index for All Urban Consumers (CPI-U)and the Chained Consumer Price Index for All Urban Consumers (C-CPI-U).
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is based on the expenditures of households included in the CPI-U definition that meet two requirements: more than one-half of the household's income must come from clerical or wage occupations, and at least one of the household's earners must have been employed for at least 37 weeks during the previous 12 months.The CPI-W population represents approximately 30 percent of the total U.S. population and is a subsetof the CPI-U population.
The CPIs are based on prices of food, clothing, shelter, fuels, transportation, doctors' and dentists'services, drugs, and other goods and services that people buy for day-to-day living. Prices are collected each month in 75 urban areas across the country from about 6,000 housing units and approximately 22,000 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 75 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 mostgoods and services are obtained by personal visit, telephone call, or web collection by the Bureau's trained representatives.
In calculating the index, price changes for the various items in each location are aggregated usingweights, which represent their importance in the spending of the appropriate population group. Localdata are then combined to obtain a U.S. city average. For the CPI-U and CPI-W, separate indexes arealso published by size of city, by region of the country, for cross-classifications of regions andpopulation-size classes, and for 23 selected local areas. Area indexes do not measure differences inthe level of prices among cities; they only measure the average change in prices for each area sincethe base period. For the C-CPI-U, data are issued only at the national level. The CPI-U and CPI-W areconsidered final when released, but the C-CPI-U is issued in preliminary form and subject to threesubsequent quarterly revisions.
The index measures price change from a designed reference date. For most of 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 equals100. An increase of 7 percent from the reference base, for example, is shown as 107.000. Alternatively,that relationship can also be expressed as the price of a base period market basket of goods and services rising from $100 to $107.
Sampling Error in the CPI
The CPI is a statistical estimate that is subject to sampling error because it is based upon a sampleof retail prices and not the complete universe of all prices. BLS calculates and publishes estimatesof 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 0.03 percent for the U.S.all items CPI. This means that if we repeatedly sample from the universe of all retail prices usingthe same methodology, and estimate a percentage change for each sample, then 95 percent of theseestimates will be within 0.06 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-U, we are 95 percent confidentthat the actual percent change based on all retail prices would fall between 0.14 and 0.26 percent.For the latest data, including information on how to use the estimates of standard error, seewww.bls.gov/cpi/tables/variance-estimates/home.htm.
Movements of the indexes from 1 month to another are usually expressed as percent changes rather thanchanges in index points, because index point changes are affected by the level of the index inrelation to its base period, while percent changes are not. The following table shows an example ofusing index values to calculate percent changes:
Item A Item B Item CYear I 112.500 225.000 110.000Year II 121.500 243.000 128.000Change in index points 9.000 18.000 18.000Percent change 9.0/112.500 x 100 = 8.0 18.0/225.000 x 100 = 8.0 18.0/110.000 x 100 = 16.4
Use of Seasonally Adjusted and Unadjusted Data
The Consumer Price Index (CPI) program produces both unadjusted and seasonally adjusted data.Seasonally adjusted data are computed using seasonal factors derived by the X-13ARIMA-SEATS seasonaladjustment method. These factors are updated each February, and the new factors are used to revise theprevious 5 years of seasonally adjusted data. The factors are available atwww.bls.gov/cpi/tables/seasonal-adjustment/seasonal-factors-2023.xlsx.
For more information on data revision scheduling, please see the Factsheet on Seasonal Adjustment atwww.bls.gov/cpi/seasonal-adjustment/questions-and-answers.htm and the Timeline of Seasonal Adjustment Methodological Changes at www.bls.gov/cpi/seasonal-adjustment/timeline-seasonal-adjustment-methodology-changes.htm.
How to Use Seasonally Adjusted and Unadjusted Data
For analyzing short-term price trends in the economy, seasonally adjusted changes are usually preferredsince they eliminate the effect of changes that normally occur at the same time and in about the samemagnitude every year - such as price movements resulting from weather events, production cycles, modelchangeovers, holidays, and sales. This allows data users to focus on changes that are not typical forthe 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 contractagreements and pension plans, for example, tie compensation changes to the Consumer Price Index beforeadjustment for seasonal variation. BLS advises against the use of seasonally adjusted data inescalation agreements because seasonally adjusted series are revised annually.
Intervention Analysis
The Bureau of Labor Statistics uses intervention analysis seasonal adjustment (IASA) for some CPIseries. Sometimes extreme values or sharp movements can distort the underlying seasonal pattern ofprice change. Intervention analysis seasonal adjustment is a process by which the distortions causedby such unusual events are estimated and removed from the data prior to calculation of seasonalfactors. The resulting seasonal factors, which more accurately represent the seasonal pattern, arethen applied to the unadjusted data.
For example, this procedure was used for the motor fuel series to offset the effects of the 2009return to normal pricing after the worldwide economic downturn in 2008. Retaining this outlier data during seasonal factor calculation would distort the computation of the seasonal portion of the timeseries data for motor fuel, so it was estimated and removed from the data prior to seasonal adjustment.Following that, seasonal factors were calculated based on this "prior adjusted" data. These seasonalfactors represent a clearer picture of the seasonal pattern in the data. The last step is for motorfuel seasonal factors to be applied to the unadjusted data.
For the seasonal factors introduced for January 2023, BLS adjusted 57 series using interventionanalysis seasonal adjustment, including selected food and beverage items, motor fuels and vehicles.
Revision of Seasonally Adjusted Indexes
Seasonally adjusted data, including the U.S. city average all items index levels, are subject to revision for up to 5 years after their original release. Every year, economists in the CPI calculatenew seasonal factors for seasonally adjusted series and apply them to the last 5 years of data. Seasonally adjusted indexes beyond the last 5 years of data are considered to be final and not subjectto revision. For January 2023, revised seasonal factors and seasonally adjusted indexes for 2018 to 2022 were calculated and published. For series which are directly adjusted using the Census X-13ARIMA-SEATS seasonal adjustment software, the seasonal factors for 2022 will be applied to datafor 2023 to produce the seasonally adjusted 2023 indexes. Series which are indirectly seasonally adjusted by summing seasonally adjusted component series have seasonal factors which are derived andare therefore not available in advance.
Determining Seasonal Status
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 "notseasonally adjusted" to "seasonally adjusted", or vice versa. If any of the 81 components of the U.S.city average all items index change their seasonal adjustment status from seasonally adjusted to notseasonally adjusted, not seasonally adjusted data will be used in the aggregation of the dependentseries for the last 5 years, but the seasonally adjusted indexes before that period will not bechanged. For 2023, 37 of the 81 components of the U.S. city average all items index are not seasonallyadjusted.
Contact Information
For additional information about the CPI visit www.bls.gov/cpi or contact the CPI Information andAnalysis Section at 202-691-7000 or cpi_info@bls.gov.
For additional information on seasonal adjustment in the CPI visit www.bls.gov/cpi/seasonal-adjustment/home.htm
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