Transmission of material in this release is embargoed until                                        
8:30 a.m. (EST) February 14, 2018              USDL-18-0238

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

CONSUMER PRICE INDEX – JANUARY 2018

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5 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 rose 2.1 percent
before seasonal adjustment.

The seasonally adjusted increase in the all items index was broad-based, with
increases in the indexes for gasoline, shelter, apparel, medical care, and food
all contributing. The energy index rose 3.0 percent in January, with the
increase in the gasoline index more than offsetting declines in other energy
component indexes. The food index rose 0.2 percent with the indexes for food at
home and food away from home both rising.

The index for all items less food and energy increased 0.3 percent in January.
Along with shelter, apparel, and medical care, the indexes for motor vehicle
insurance, personal care, and used cars and trucks also rose in January. The
indexes for airline fares and new vehicles were among those that declined over
the month.    

The all items index rose 2.1 percent for the 12 months ending January, the same
increase as for the 12 months ending December. The index for all items less food
and energy rose 1.8 percent over the past year, while the energy index increased
5.5 percent and the food index advanced 1.7 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 
                              2017  2017  2017  2017  2017  2017  2018   Jan.  
                                                                         2018  
                                                                               
                                                                               
 All items..................    .1    .4    .5    .1    .3    .2    .5      2.1
  Food......................    .2    .1    .1    .1    .0    .2    .2      1.7
   Food at home.............    .2   -.1    .0    .1   -.1    .2    .1      1.0
   Food away from home (1)..    .2    .3    .3    .1    .2    .2    .4      2.5
  Energy....................   -.7   3.3   4.7  -1.4   3.2   -.2   3.0      5.5
   Energy commodities.......  -1.5   7.2   9.6  -3.0   5.8   -.7   5.8      9.0
    Gasoline (all types)....  -1.5   7.4  10.0  -3.2   6.0   -.8   5.7      8.5
    Fuel oil................  -1.7   5.2   6.4   1.4   5.6    .9   9.5     22.5
   Energy services..........    .0   -.1    .0    .4    .5    .4   -.8      1.9
    Electricity.............    .3    .0    .1    .4    .5    .2   -.2      2.4
    Utility (piped) gas                                                        
       service..............  -1.3   -.5   -.4    .4    .7   1.0  -2.6       .2
  All items less food and                                                      
     energy.................    .1    .2    .1    .2    .1    .2    .3      1.8
   Commodities less food and                                                   
      energy commodities....   -.1   -.1   -.2    .0   -.1    .2    .4      -.7
    New vehicles............   -.4    .0   -.3   -.2    .2    .5   -.1     -1.2
    Used cars and trucks....   -.2   -.1   -.3    .7    .5    .7    .4      -.6
    Apparel.................    .0    .0    .1   -.2   -.9   -.3   1.7      -.7
    Medical care commodities    .8   -.2   -.5    .0    .5    .9   -.1      1.8
   Services less energy                                                        
      services..............    .2    .3    .2    .3    .2    .3    .3      2.6
    Shelter.................    .2    .4    .2    .3    .2    .3    .2      3.2
    Transportation services     .3    .4    .3    .4    .1    .3    .8      4.0
    Medical care services...    .2    .2    .1    .3   -.1    .2    .6      2.0

   1 Not seasonally adjusted.




Food

The food index increased 0.2 percent in January. The index for food away from home
increased 0.4 percent, its largest monthly increase since last January. The food at
home index increased 0.1 percent. Major grocery store food group indexes were mixed,
with two rising, one falling, and three unchanged. The index for fruits and
vegetables rose 0.5 percent reflecting a 1.9-percent increase in the fresh fruits
index and a 1.2-percent decline in the index for fresh vegetables. The index for
cereals and bakery products rose in January, increasing 0.3 percent.

The index for meats, poultry, fish, and eggs declined in January, falling 0.2 percent
after rising in December. The indexes for dairy and related products, nonalcoholic
beverages, and other food at home were all unchanged in January.

Over the last 12 months, the index for food away from home increased 2.5 percent.
The food at home index rose 1.0 percent, with four of the six major grocery store
food groups rising over the span. The fruits and vegetables index increased the most,
at 3.5 percent, while the indexes for dairy and related products and cereals and
bakery products both declined over the last year. 

Energy

The energy index rose 3.0 percent in January. The gasoline index increased 5.7 percent
in January after falling in December. (Before seasonal adjustment, gasoline prices
increased 3.2 percent in January.) The fuel oil index also increased in January, rising
9.5 percent. In contrast, the index for natural gas fell 2.6 percent in January and the
electricity index decreased 0.2 percent.  

All the major energy component indexes increased over the past 12 months. The gasoline
index rose 8.5 percent and the fuel oil index rose 22.5 percent. The electricity index
rose more modestly, increasing 2.4 percent, and the index for natural gas increased
slightly, rising 0.2 percent.  

All items less food and energy

The index for all items less food and energy increased 0.3 percent in January. The
shelter index increased 0.2 percent as the indexes for rent and owners' equivalent rent
both rose 0.3 percent, while the index for lodging away from home declined 2.0 percent
over the month. The apparel index rose sharply in January, increasing 1.7 percent after
falling in previous months. The medical care index increased as well, rising 0.4 percent.
The index for hospital services increased 1.3 percent, and the physicians' services
index rose 0.3 percent; the index for prescription drugs, however, declined 0.2 percent. 

The index for motor vehicle insurance continued to rise in January, increasing
1.3 percent, its largest 1-month increase since November 2001. The personal care index
rose 0.5 percent; this was its largest increase since January 2015. The used cars and
trucks index also continued to rise, advancing 0.4 percent in January. The indexes for
household furnishings and operations, education, and tobacco also increased in January.       

A few indexes declined in January, including airlines fares, which fell for the third
consecutive month, decreasing 0.6 percent. The new vehicles index decreased 0.1 percent.
The indexes for recreation, communication, and alcoholic beverages were all unchanged
in January. 

The index for all items less food and energy rose 1.8 percent over the past year. The
index for motor vehicle insurance rose 8.5 percent over the past 12 months, its largest
12-month increase since the period ending June 2003. The shelter index increased
3.2 percent over the last 12 months, and the medical care index rose 2.0 percent. The
indexes for airline fares, new vehicles, used cars and trucks, and apparel declined
over the past 12 months.
 
Not seasonally adjusted CPI measures

The Consumer Price Index for All Urban Consumers (CPI-U) increased 2.1 percent over the
last 12 months to an index level of 247.867 (1982-84=100). For the month, the index
increased 0.5 percent prior to seasonal adjustment.  

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased
2.1 percent over the last 12 months to an index level of 241.919 (1982-84=100). For the
month, the index increased 0.6 percent prior to seasonal adjustment.  

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) increased 1.9 percent
over the last 12 months. For the month, the index increased 0.5 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 2018 is scheduled to be released on Tuesday,
March 13, 2018, at 8:30 a.m. (EDT).


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In January 2018, BLS introduced a new geographic area sample for the Consumer Price Index (CPI).
The 2018 revison utilized the 2010 Decennial Census and incorporated an updated area sample
design, changed the frequency of publication for several local area indexes, and established
some new local area and aggregate indexes.  The first indexes using the new structure were
published on February 14, 2018.  Additional information on the geographic revision is available at:
www.bls.gov/cpi/georevision2018.htm.

Due to the 2018 geographic revision, table 4 of the national CPI news release has changed to
reflect additional or discontinued areas, as well as area name changes.
---------------------------------------------------------------------------------------------------		







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 94 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 28 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 5,000 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 https://www.bls.gov/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. For more information on data revision scheduling, please see the
Factsheet on Seasonal Adjustment at www.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.

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 in January 2018, BLS adjusted 38 series using intervention analysis
seasonal adjustment, including selected food and beverage items, motor fuels, and natural gas.

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. In
January 2018, revised seasonal factors and seasonally adjusted indexes for 2013 to 2017 were calculated
and published. For series which are directly adjusted using the Census X-13ARIMA-SEATS seasonal adjustment
software, the seasonal factors for 2017 will be applied to data for 2018 to produce the seasonally
adjusted 2018 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 2018.

Contact Information

For additional information about the CPI visit www.bls.gov/cpi or contact the CPI Information and Analysis
Section at 202-691-7000 or cpi_info@bls.gov.

For additional information on seasonal adjustment in the CPI visit
https://www.bls.gov/cpi/seasonal-adjustment/home.htm or contact the CPI seasonal adjustment section at
202-691-6968 or cpiseas@bls.gov.

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.