Transmission of material in this release is embargoed until 8:30 a.m. (EST) January 14, 2020 USDL-20-0044 Technical information: (202) 691-7000 ? email@example.com ? www.magnetmusik.com/cpi Media Contact: (202) 691-5902 ? PressOffice@bls.gov CONSUMER PRICE INDEX ?DECEMBER 2019 The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent in December on a seasonally adjusted basis after rising 0.3 percent in November, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.3 percent before seasonal adjustment. The indexes for gasoline, shelter, and medical care all rose in December, accounting for most of the increase in the seasonally adjusted all items index. The gasoline index increased 2.8 percent in December. Other major energy component indexes were mixed, and the energy index rose 1.4 percent. The food index rose 0.2 percent in December with the indexes for both food at home and food away from home increasing over the month. The index for all items less food and energy rose 0.1 percent in December after increasing 0.2 percent in November. Along with the indexes for shelter and medical care, the indexes for apparel, motor vehicle insurance, recreation, and new vehicles all increased in December. The indexes for used cars and trucks, household furnishings and operations, and airline fares were among those to decline. The all items index increased 2.3 percent for the 12 months ending December, the largest 12-month increase since the period ending October 2018. The index for all items less food and energy also rose 2.3 percent over the last 12 months, the same increase as the periods ending October and November. The food index rose 1.8 percent over the last 12 months, while the energy index increased 3.4 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. June July Aug. Sep. Oct. Nov. Dec. ended 2019 2019 2019 2019 2019 2019 2019 Dec. 2019 All items.................. .1 .3 .1 .0 .4 .3 .2 2.3 Food...................... .0 .0 .0 .1 .2 .1 .2 1.8 Food at home............. -.2 -.1 -.2 .0 .3 .1 .1 .7 Food away from home(1)... .3 .2 .2 .3 .2 .2 .3 3.1 Energy.................... -2.3 1.3 -1.9 -1.4 2.7 .8 1.4 3.4 Energy commodities....... -3.5 2.4 -3.3 -2.3 3.5 1.1 2.8 7.4 Gasoline (all types).... -3.6 2.5 -3.5 -2.4 3.7 1.1 2.8 7.9 Fuel oil................ -2.3 .6 -.9 -.8 .8 1.4 1.6 4.6 Energy services.......... -.7 .0 -.2 -.1 1.8 .4 -.3 -1.2 Electricity............. -.8 .6 -.3 .0 1.6 .3 -.5 -.4 Utility (piped) gas service.............. -.3 -1.8 .1 -.7 2.4 1.1 .3 -3.5 All items less food and energy................. .3 .3 .3 .1 .2 .2 .1 2.3 Commodities less food and energy commodities.... .4 .2 .2 -.3 -.1 .0 .0 .1 New vehicles............ .1 -.2 -.1 -.1 -.2 -.1 .1 .1 Used cars and trucks.... 1.6 .9 1.1 -1.6 1.3 .6 -.8 -.7 Apparel................. 1.1 .4 .2 -.4 -1.8 .1 .4 -1.2 Medical care commodities -.2 .2 .3 -.6 1.2 .1 1.5 2.5 Services less energy services.............. .3 .3 .3 .3 .2 .3 .2 3.0 Shelter................. .3 .3 .2 .3 .1 .3 .2 3.2 Transportation services .0 .3 .4 .3 .1 .0 -.3 .6 Medical care services... .4 .5 .9 .4 .9 .4 .4 5.1 Footnotes: (1) Not seasonally adjusted. Food The food index increased 0.2 percent in December after rising 0.1 percent in November. The index for food at home rose 0.1 percent, the same increase as the prior month. The index for meats, poultry, fish, and eggs was the only major grocery store food group index to rise in December, increasing 1.3 percent as the index for beef rose 2.4 percent and the index for eggs increased 2.9 percent. In contrast, the index for cereals and bakery products fell 0.4 percent in December after rising in November. The index for nonalcoholic beverages also fell 0.4 percent, while the indexes for fruits and vegetables and for other food at home both declined 0.3 percent over the month. The index for dairy and related products was unchanged in December after rising in November. The index for food away from home rose 0.3 percent in December after rising 0.2 percent in November. The index for limited service meals increased 0.4 percent, while the index for full service meals rose 0.2 percent. The food at home index increased 0.7 percent over the last 12 months. Five of the six major grocery store food group indexes rose over the past 12 months, with increases ranging from 0.3 percent (both cereals and bakery products and other food at home) to 2.4 percent (dairy and related products). The fruits and vegetables index declined over the span, falling 1.3 percent. The index for food away from home rose 3.1 percent over the last year. The index for full service meals increased 3.3 percent and the index for limited service meals rose 3.0 percent. Energy The energy index increased 1.4 percent in December, its third consecutive monthly increase. The gasoline index rose 2.8 percent in December following a 1.1-percent rise in November. (Before seasonal adjustment, gasoline prices fell 1.6 percent in December.) The electricity index declined in December, falling 0.5 percent after rising in November. The index for natural gas increased 0.3 percent in December, its third monthly increase in a row. The energy index increased 3.4 percent over the past 12 months, with its major component indexes mixed. The gasoline index increased 7.9 percent and the fuel oil index rose 4.6 percent. However, the index for natural gas fell 3.5 percent and the index for electricity declined 0.4 percent. All items less food and energy The index for all items less food and energy increased 0.1 percent in December after rising 0.2 percent in both October and November. The shelter index rose 0.2 percent in December, with the indexes for rent and for owners?equivalent rent both increasing 0.2 percent. The medical care index continued to rise, increasing 0.6 percent in December following a 0.3-percent increase in November. The prescription drugs index rose 2.1 percent, while the hospital services index increased 0.2 percent and the physicians?services index advanced 0.1 percent. The apparel index rose 0.4 percent in December following a 0.1-percent increase in November. The index for motor vehicle insurance rose 0.2 percent after falling in November. The index for new vehicles rose 0.1 percent in December, ending a series of five consecutive monthly declines. The indexes for recreation and for education also increased 0.1 percent in December. The index for used cars and trucks fell 0.8 percent in December after rising in October and November. The index for household furnishings and operations declined 0.4 percent in December, its largest monthly decline since December 2014. The index for airline fares fell 1.6 percent in December, its third consecutive monthly decline, and the index for personal care fell 0.2 percent. The index for all items less food and energy rose 2.3 percent over the past 12 months. The shelter index rose 3.2 percent over the 12-month span, and the medical care index rose 4.6 percent. Apparel (-1.2 percent) and used cars and trucks (-0.7 percent) were among the few indexes to decline over the last year. Not seasonally adjusted CPI measures The Consumer Price Index for All Urban Consumers (CPI-U) increased 2.3 percent over the last 12 months to an index level of 256.974 (1982-84=100). For the month, the index decreased 0.1 percent prior to seasonal adjustment. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 2.3 percent over the last 12 months to an index level of 250.452 (1982-84=100). For the month, the index decreased 0.1 percent prior to seasonal adjustment. The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) increased 2.1 percent over the last 12 months. For the month, the index decreased 0.1 percent on a not seasonally adjusted basis. Please note that the indexes for the past 10 to 12 months are subject to revision. Year in Review (December to December) The all items CPI rose 2.3 percent in 2019. This was larger than the 2018 increase of 1.9 percent and the largest advance since the 3.0-percent rise in 2011. The index rose at a 1.8-percent average annual rate over the last 10 years. The food index increased 1.8 percent in 2019, a slightly larger increase than the 2018 rise of 1.6 percent. The index for food at home increased 0.7 percent in 2019, continuing a trend of modest increases; it rose 0.6 percent in 2018 and 0.9 percent in 2017. Over the last 10 years, the food index rose at an average annual rate of 1.8 percent. The food at home index rose at a 1.3-percent annual rate, and the food away from home index increased at a 2.5-percent annual rate since December 2009. Five of the six major grocery store food group indexes increased in 2019. The index for dairy and related products rose 2.4 percent after falling 0.1 percent in 2018. Similarly, the index for meats, poultry, fish, and eggs rose 2.3 percent in 2019 after falling in 2018. The index for nonalcoholic beverages rose 1.0 percent in 2019 after a 1.4-percent increase in 2018. The indexes for cereals and bakery products and for other food at home both rose 0.3 percent in 2019. The index for fruits and vegetables declined in 2019, falling 1.3 percent after rising in 2018 and 2017. The indexes for fresh fruits and for fresh vegetables both declined over the year. The index for food away from home rose 3.1 percent in 2019. This was larger than the 2.8-percent increase in 2018 and the largest December-to-December rise since 2008. The energy index rose 3.4 percent in 2019 after falling slightly in 2018. The gasoline index rose 7.9 percent over the year after falling 2.1 percent in 2018. The index for fuel oil rose 4.6 percent in 2019. These increases more than offset declines in the other major energy component indexes. The index for natural gas fell 3.5 percent in 2019 after rising in each of the prior 3 years. The electricity index declined 0.4 percent over the year, its first decline since 2015. The energy index increased at a 0.5-percent average annual rate over the past 10 years. The index for all items less food and energy rose 2.3 percent in 2019, a slightly larger increase than its 2018 rise of 2.2 percent and larger than its 1.9-percent average annual increase over the past 10 years. The shelter index rose 3.2 percent in 2019, the same increase as in both 2018 and 2017. The index for rent rose 3.7 percent in 2019, while the index for owners' equivalent rent increased 3.3 percent. The index for household furnishings and operations increased 1.0 percent in 2019 after rising 2.1 percent in 2018. The medical care index rose 4.6 percent in 2019, well above its 2.0-percent rise in 2018 and the largest December-to-December advance since 2007. The index for prescription drugs rose 3.0 percent after falling 0.6 percent in 2018. The index for hospital services rose 3.0 percent, while the physicians' services index increased 1.4 percent. The medical care index increased at a 3.0-percent average annual rate since December 2009. The index for motor vehicle insurance was unchanged in 2019 after rising in each of the past 20 years. The index for new vehicles rose 0.1 percent in 2019 after falling in 2018 and 2017. The index for used cars and trucks declined 0.7 percent in 2019 after rising 1.4 percent in 2018. The education index increased 2.1 percent in 2019 after a 2.6-percent rise in 2018. The index for communication increased 0.7 percent in 2019 after falling in each of the previous 9 years. The index for airline fares rose 1.7 percent after falling in each of the previous 6 years. The recreation index rose 1.5 percent in 2019, as did the personal care index. The index for tobacco increased 5.5 percent, and the alcoholic beverages index rose 0.5 percent. The apparel index declined for the sixth consecutive year, falling 1.2 percent. _______________ The Consumer Price Index for January 2020 is scheduled to be released on Thursday, February 13, 2020 at 8:30 a.m. (EST). 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 urban wage earners and clerical workers. The all urban consumer group represents about 93 percent of the total 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 retired people, 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 urban consumers 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 about 29 percent of the total U.S. population and is a subset of 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 most goods and services are obtained by personal visits or telephone calls by the Bureau’s trained representatives. In calculating the index, price changes for the various items in each location are aggregated using 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 23 selected 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. The CPI-U and CPI-W are considered final when released, but the C-CPI-U is issued in preliminary form and subject to three subsequent 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 equals 100. 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 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 0.03 percent for the U.S. all items CPI. 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 percent of these estimates 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 confident that 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, see http://www.magnetmusik.com/cpi/tables/variance-estimates/home.htm. Calculating Index Changes Movements of the indexes from 1 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 following table shows an example of using index values to calculate percent changes: ? Item A Item B Item C Year I 112.500 225.000 110.000 Year II 121.500 243.000 128.000 Change in index points 9.000 18.000 18.000 Percent 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) 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 February, and the new factors are used to revise the previous 5 years of seasonally adjusted data. The factors are available at www.magnetmusik.com/cpi/tables/seasonal-adjustment/seasonal-factors-2019.pdf. For more information on data revision scheduling, please see the Factsheet on Seasonal Adjustment at www.magnetmusik.com/cpi/seasonal-adjustment/questions-and-answers.htm and the Timeline of Seasonal Adjustment Methodological Changes at www.magnetmusik.com/cpi/seasonal-adjustment/timeline-seasonal-adjustment-methodology-changes.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 year—such as price movements resulting from weather events, 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. Intervention Analysis 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 example, this procedure was used for the motor fuel series to offset the effects of the 2009 return 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 time series 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 seasonal factors represent a clearer picture of the seasonal pattern in the data. The last step is for motor fuel seasonal factors to be applied to the unadjusted data. For the seasonal factors introduced for January 2019, BLS adjusted 51 series using intervention analysis seasonal adjustment, including selected food and beverage items, motor fuels, electricity, 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 calculate new 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 subject to revision. For January 2019, revised seasonal factors and seasonally adjusted indexes for 2014 to 2018 were calculated and published. For series which are directly adjusted using the Census X-13ARIMA-SEATS seasonal adjustment software, the seasonal factors for 2018 will be applied to data for 2019 to produce the seasonally adjusted 2019 indexes. Series which are indirectly seasonally adjusted by summing seasonally adjusted component series have seasonal factors which are derived and are 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 "not seasonally 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 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. Twenty-nine of the 81 components of the U.S. city average all items index are not seasonally adjusted for 2019. Contact Information For additional information about the CPI visit www.magnetmusik.com/cpi or contact the CPI Information and Analysis Section at 202-691-7000 or firstname.lastname@example.org. For additional information on seasonal adjustment in the CPI visit www.magnetmusik.com/cpi/seasonal-adjustment/home.htm or contact the CPI seasonal adjustment section at 202-691-6968 or email@example.com. Information from this release will be made available to sensory impaired individuals upon request. Voice phone: 202-691-5200; Federal Relay Service: 1-800-877-8339.