Transmission of material in this release is embargoed until                                       
8:30 a.m. (EST) November 14, 2018              USDL-18-1823

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

CONSUMER PRICE INDEX – OCTOBER 2018

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent
in October on a seasonally adjusted basis after rising 0.1 percent in September,
the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the
all items index rose 2.5 percent before seasonal adjustment.

An increase in the gasoline index was responsible for over one-third of the
seasonally adjusted increase in the all items index; advances in the indexes for
shelter, used cars and trucks, and electricity also contributed. The increases
in the gasoline and electricity indexes led to a 2.4-percent rise in the energy
index. The food index, in contrast, declined slightly in October. 

The index for all items less food and energy rose 0.2 percent in October
following a 0.1-percent increase in September. Along with the indexes for
shelter and for used cars and trucks, the indexes for medical care, household
furnishings and operations, motor vehicle insurance, and tobacco all increased
in October. The indexes for communication, new vehicles, and recreation all
declined. 

The all items index rose 2.5 percent for the 12 months ending October, a larger
increase than the 2.3-percent increase for the 12 months ending September. The
index for all items less food and energy rose 2.1 percent for the 12 months
ending October. The energy index increased 8.9 percent, while the food index
increased more modestly, advancing 1.2 percent over the last 12 months.   


 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.
                              Apr.  May   June  July  Aug.  Sep.  Oct.   ended 
                              2018  2018  2018  2018  2018  2018  2018   Oct.  
                                                                         2018  
                                                                               
                                                                               
 All items..................    .2    .2    .1    .2    .2    .1    .3      2.5
  Food......................    .3    .0    .2    .1    .1    .0   -.1      1.2
   Food at home.............    .3   -.2    .2    .2    .0   -.1   -.2       .1
   Food away from home (1)..    .2    .3    .2    .1    .2    .2    .1      2.5
  Energy....................   1.4    .9   -.3   -.5   1.9   -.5   2.4      8.9
   Energy commodities.......   3.0   1.6    .6   -.6   3.0   -.2   2.9     16.3
    Gasoline (all types)....   3.0   1.7    .5   -.6   3.0   -.2   3.0     16.1
    Fuel oil................   2.7   -.7   2.9   1.2   2.2    .3   3.7     26.2
   Energy services..........   -.5   -.1  -1.5   -.4    .4   -.8   1.7       .1
    Electricity.............   -.6    .1  -1.4   -.4    .3   -.5   2.3       .7
    Utility (piped) gas                                                        
       service..............   -.4   -.6  -1.7   -.5    .9  -1.7   -.6     -2.1
  All items less food and                                                      
     energy.................    .1    .2    .2    .2    .1    .1    .2      2.1
   Commodities less food and                                                   
      energy commodities....   -.1   -.1    .0    .1   -.3   -.3    .3      -.1
    New vehicles............   -.5    .3    .4    .3    .0   -.1   -.2       .5
    Used cars and trucks....  -1.6   -.9    .7   1.3    .4  -3.0   2.6       .4
    Apparel.................    .3    .0   -.9   -.3  -1.6    .9    .1      -.4
    Medical care commodities   -.2   1.3    .2  -1.1   -.3   -.1   -.1       .7
   Services less energy                                                        
      services..............    .2    .3    .2    .3    .2    .2    .2      2.9
    Shelter.................    .3    .3    .1    .3    .3    .2    .2      3.2
    Transportation services    -.4    .0    .2    .5    .3    .5    .1      3.8
    Medical care services...    .2   -.1    .5    .1   -.2    .2    .2      1.9

   1 Not seasonally adjusted.




Food

The food index declined 0.1 percent in October as the index for food at home
fell 0.2 percent and the index for food away from home rose 0.1 percent. Three
of the six major grocery store food group indexes declined in October. The
fruits and vegetables index fell 0.7 percent in October, its third consecutive
decline. The index for fresh fruits fell 1.8 percent, while the fresh vegetables
index increased 0.3 percent. The index for cereals and bakery products fell 0.6
percent, and the index for dairy and related products declined 0.4 percent.

The index for nonalcoholic beverages was the only major grocery store food group
to increase in October, rising 0.2 percent. The index for meats, poultry, fish,
and eggs was unchanged in October with its component indexes mixed, and the
index for other food at home was also unchanged in October.

The food at home index increased slightly over the past year, rising 0.1 percent
. The indexes for nonalcoholic beverages, cereals and bakery products, and other
food at home all increased over the last 12 months; the remaining major grocery
store food group indexes all declined over the span. The index for food away
from home rose 2.5 percent over the last year. 

Energy

The energy index rose 2.4 percent in October after falling in September. The
gasoline index increased 3.0 percent in October following a 0.2-percent decline
in September. (Before seasonal adjustment, gasoline prices increased 0.6 percent
in October.) The index for electricity rose 2.3 percent in October. In contrast,
the index for natural gas declined, falling 0.6 percent. 

The energy index increased 8.9 percent over the last 12 months. The gasoline
index rose 16.1 percent over the span, while the fuel oil index increased 26.2
percent. The electricity index increased modestly, rising 0.7 percent over the
last year. The index for natural gas, in contrast, declined 2.1 percent over the
last 12 months.  

All items less food and energy

The index for all items less food and energy increased 0.2 percent in October.
The shelter index rose 0.2 percent in October, the same increase as in
September. The rent index rose 0.2 percent and the index for owners' equivalent
rent advanced 0.3 percent. The index for lodging away from home declined in
October, falling 2.1 percent. 

The index for used cars and trucks rose 2.6 percent in October following a
3.0-percent decline in September. The index for medical care increased 0.2
percent in October, although the indexes for physicians' services and hospital
services were both unchanged. The index for household furnishings and operations
increased in October, rising 0.3 percent. The index for motor vehicle insurance
continued to rise in October, increasing 0.5 percent. The tobacco index rose
1.3 percent, while the index for apparel increased slightly, rising 0.1 percent.

The index for communication declined 0.4 percent in October. The new vehicles
index also declined, falling 0.2 percent in October after decreasing 0.1 percent
in September. The index for recreation also fell, decreasing 0.1 percent, as did
the index for personal care. 

The index for all items less food and energy rose 2.1 percent over the past 12
months. The shelter index increased 3.2 percent over the last year, and the
medical care index rose 1.7 percent. Among transportation indexes, the new
vehicles index rose 0.5 percent over the last 12 months, while the index for
used cars and trucks increased 0.4 percent. The motor vehicle insurance index 
rose 6.7 percent, while the index for airline fares declined over the past year,
falling 0.5 percent.   

Not seasonally adjusted CPI measures

The Consumer Price Index for All Urban Consumers (CPI-U) increased 2.5 percent
over the last 12 months to an index level of 252.885 (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 2.7 percent over the last 12 months to an index level of 247.038
(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 2.3
percent over the last 12 months. For the month, the index rose 0.2 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 November 2018 is scheduled to be released on
Wednesday, December 12, 2018, 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 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.