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U.S. September Consumer Price Index Report (Text)

Following is the text of the Sept. consumer prices from the Labor Department.

Consumer Price Index - September 2011

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in September on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.9 percent before seasonal adjustment.

Increases in energy and food indexes were the main cause of the seasonally adjusted all items increase. The gasoline index continued to rise, and indexes for electricity and natural gas increased as well. Broad increases in food indexes also continued in September, with the food at home index rising 0.6 percent for the third month in a row and no major grocery store food group indexes declining.

The index for all items less food and energy increased 0.1 percent in September, its smallest increase since March. The index for apparel declined in September after a series of sharp increases, and the indexes for used cars and recreation turned down as well. The indexes for new vehicles and household furnishings and operations were both flat. The shelter index rose, but posted its smallest increase since April, while the indexes for medical care, airline fares, and tobacco all increased.

The 12-month change in the all items index, which was 3.8 percent in August, edged up to 3.9 percent in September. The 12-month change for all items less food and energy remained at 2.0 percent for the second straight month. The energy index has risen 19.3 percent over the last year, while the food index has increased 4.7 percent.

Consumer Price Index Data for September 2011

Food

The food index, which rose 0.5 percent in August, increased 0.4 percent in September. The index for food at home repeated its July and August increase of 0.6 percent. The index for nonalcoholic beverages was unchanged, while the remaining major grocery store food groups all posted increases. The dairy and related products index rose the most, increasing 1.2 percent, followed by 0.9 percent increases in both the cereals and bakery products index and the fruits and vegetables index. Within the latter group, the indexes for apples and tomatoes both posted significant increases. The index for meats, poultry, fish, and eggs rose 0.4 percent as the index for eggs rose sharply, and the index for other food at home rose 0.6 percent. The food at home index has now risen 6.3 percent over the past 12 months with the dairy index up 10.2 percent over that period. After rising 0.4 percent in August, the index for food away from home increased 0.2 percent in September and has risen 2.6 percent over the last 12 months.

Energy

The energy index rose 2.0 percent in September after a 1.2 percent increase in August. The gasoline index, which was up 1.9 percent in August, rose 2.9 percent in September. (Before seasonal adjustment, gasoline prices fell 0.7 percent in September.) Over the past 12 months, the gasoline index has increased 33.3 percent. The household energy index also rose in September, advancing 0.7 percent after a 0.4 percent increase in August. The electricity index advanced 0.7 percent while index for natural gas rose 0.8 percent; the fuel oil index declined 0.7 percent. Over the past year, the household energy index has increased 3.7 percent. The electricity index has risen 2.7 percent and the index for natural gas has increased 0.2 percent, while the fuel oil index has risen sharply, increasing 33.4 percent.

All items less food and energy

The index for all items less food and energy increased 0.1 percent in September, a deceleration from recent months. Several factors contributed to the smaller increase in September. The apparel index, which had risen over one percent for four months in a row, declined 1.1 percent in September. The index for used cars and trucks also turned down, falling 0.6 percent after a long series of increases, and the recreation index declined 0.1 percent after rising in August. The shelter index decelerated, increasing 0.1 percent in September following a 0.3 percent increase in July and a 0.2 percent increase in August. The rent index increased 0.2 percent while the index for owners' equivalent rent increased 0.1 percent and the lodging away from home index declined 0.7 percent. The index for household furnishings and operations, which rose 0.3 percent in August, was unchanged in September, and the index for new vehicles was unchanged for the third month in a row. In contrast the medical care index continued to increase, rising 0.2 percent for the fifth month in a row. The indexes for airline fares, tobacco, and personal care all increased as well.

After increasing steadily through most of the year, the 12- month change in the index for all items less food and energy remained at 2.0 percent for the second month in a row. The shelter index has increased 1.7 percent over the last 12 months. The index for medical care has risen 2.8 percent while the apparel index has increased 3.5 percent. The new vehicles index has increased 3.6 percent and the index for used cars and trucks has increased 5.1 percent.

Not seasonally adjusted CPI measures

The Consumer Price Index for All Urban Consumers (CPI-U) increased 3.9 percent over the last 12 months to an index level of 226.889 (1982-84=100). For the month, the index increased 0.2 percent prior to seasonal adjustment.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 4.4 percent over the last 12 months to an index level of 223.688 (1982-84=100). For the month, the index increased 0.2 percent prior to seasonal adjustment.

The Chained Consumer Price Index for All Urban Consumers (C- CPI-U) increased 3.7 percent over the last 12 months. For the month, the index increased 0.1 percent on a not seasonally adjusted basis. Please note that the indexes for the post-2009 period are subject to revision.

The Consumer Price Index for October 2011 is scheduled to be released on Wednesday, November 16, 2011, at 8:30 a.m. (EST).

-------------------------------------------------------------- Redesigning the Consumer Price Index (CPI) News Release Tables

In August 2009, the Bureau of Labor Statistics (BLS) restructured the text of the CPI news release to focus on the price movements of three broad expenditure categories; namely Food, Energy, and All items less food and energy. Table A within the CPI news release text was also updated in August 2009 to reflect this new structure. Before August 2009, the text of the CPI news release had focused on eight CPI 'major groups' (Food and beverages; Housing; Apparel; Transportation; Medical care; Recreation; Education and communication; and Other goods and services).

While the text of the CPI news release was restructured in 2009, seven additional CPI news release tables continued to be published using the eight major groups. BLS is redesigning these news release tables, to reflect the focus on Food, Energy, and All items less food and energy. Within these three broad categories, CPI item series will be further divided into commodities and services.

A mock-up of the new CPI news release tables can be found at http://beta.bls.gov/cpi/redesigned_cpi_tables/cpiprmockup.htm. Comments or questions about these new tables can be forwarded to cpi_info@bls.gov. The public comment period runs through October 31, 2011

Beyond the redesign in the structure of the CPI news release tables, several other improvements to these tables have been made:

The new Table 1 gives a summary of the index series which typically contribute to changes in the Consumer Price Index for All Urban Consumers (CPI-U).

The new Table 2 will show the full publication stub using the new structure for the CPI-U, including 11 new items series that were created to augment the redesign in the publication structure.

Table 3 will show aggregate item series (e.g., Transportation) that do not fall under the Food, Energy, and All items less food and energy structure.

Table 4 will show the All items indexes at the local, regional, and city-size class levels. Table 5 will show the Chained Consumer Price Index for All Urban Consumers (C-CPI- U), and presents a history of annual percentage changes in the C-CPI-U compared to the CPI-U.

Table 6 will focus on 1-month seasonally adjusted changes in the CPI-U, while table 7 will focus on 12-month not seasonally adjusted changes. Tables 6 and 7 will present three additional pieces of data to help users better interpret index changes. First, these tables will show the effect each item has on the price change for All items. For example, if the effect of food is 0.4, and the index for All items increased 1.2 percent, it can be said that increases in food prices accounted for 0.4 / 1.2, or 33.3 percent, of the increase in overall prices for that period. Said another way, had food prices been unchanged, the All items index only would have increased 0.8 percent (or 1.2 percent for All items, minus the 0.4 effect for Food). Effects can be negative as well. For example, if the effect of food was a negative 0.1, and the All items index rose 0.5 percent, the All items index actually would have been 0.1 percent higher (or 0.6 percent) had food prices been unchanged.

Second, standard errors for percent changes will be shown on tables 6 and 7. Confidence intervals for statistics can be created using standard errors; e.g., roughly 95% confidence intervals can be constructed using two standard errors. For example, if an item increased 3.7 percent, and its standard error was 0.6 percent, the 95% confidence interval for that price change can be said to be 3.7 percent plus or minus two standard errors, or 3.7 percent plus or minus 1.2 percent.

Each item series in tables 6 and 7 will show the last time that item had a price change as large (or as small) as the percent change published that period. For example, if bananas rose 3.7 percent, and that was its largest increase since November 2007, that would be noted in the new tables.

In addition, most of the existing tables show the relative importance, or weight, of each item category as of the previous December. The relative importance columns in the new tables will be improved in that they will be updated monthly to reflect the change in relative prices over time.

Finally, there will no longer be any news release tables that focus on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). That said, the CPI-W All items index level and percent changes will still be noted in the text of the news release.

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 32 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 cover approximately 87 percent of the total population and include 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.

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 201.8 Equals index point change 0.616

Percent Change

Index point difference 0.616 Divided by the previous index 201.8 Equals 0.003 Results multiplied by one hundred 0.003x100 Equals percent change 0.3

Regions Defined

The states in the four regions shown in Tables 3 and 6 are listed below.

The Northeast--Connecticut, Maine, Massachusetts, New Hampshire, New York, New Jersey, Pennsylvania, Rhode Island, and Vermont. The Midwest--Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin. The South--Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia, and the District of Columbia. The West--Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.

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-12-ARIMA Seasonal Adjustment Method. Seasonally adjusted indexes and seasonal factors are computed annually. Each year, the last 5 years of seasonally adjusted data are revised. Data from January 2006 through December 2010 were replaced in January 2011. 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 54 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 5 years, but the seasonally adjusted indexes before that period will not be changed. Note: 37 of the 82 components are not seasonally adjusted for 2011.

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.

For the seasonal factors introduced in January 2011, BLS adjusted 29 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 damage to oil refineries from Hurricane Katrina.

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.

To contact the reporter on this story: Kristy Scheuble in Washington kmckeaney@bloomberg.net

To contact the editor responsible for this story: Marco Babic at mbabic@bloomberg.net

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