Transmission of material in this release is embargoed until                                        
8:30 a.m. (EST) November 15, 2017              USDL-17-1503

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 2017

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in 
October on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics 
reported today. Over the last 12 months, the all items index rose 2.0 percent.

The shelter index increased 0.3 percent and was the main factor in the seasonally
adjusted all items increase. The energy index fell, as a decline in the gasoline
index outweighed increases in other energy component indexes. The food index was
unchanged over the month. 

The index for all items less food and energy increased 0.2 percent in October. 
In addition to the shelter index, the indexes for medical care, used cars and 
trucks, tobacco, education, motor vehicle insurance, and personal care were 
among those that increased. The indexes for new vehicles, recreation, and 
apparel all declined. 

The all items index rose 2.0 percent for the 12 months ending October, a smaller
increase than the 2.2-percent increase for the period ending September. The 
index for all items less food and energy rose 1.8 percent over the past year, a
slightly larger increase compared to the 1.7-percent increase for the 12 months
ending September. The energy index increased 6.4 percent over the last 12 
months, and the index for food rose 1.3 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.
                              Apr.  May   June  July  Aug.  Sep.  Oct.   ended 
                              2017  2017  2017  2017  2017  2017  2017   Oct.  
                                                                         2017  
                                                                               
                                                                               
 All items..................    .2   -.1    .0    .1    .4    .5    .1      2.0
  Food......................    .2    .2    .0    .2    .1    .1    .0      1.3
   Food at home.............    .2    .1   -.1    .2   -.2    .0    .0       .6
   Food away from home (1)..    .2    .2    .0    .2    .3    .3    .1      2.3
  Energy....................   1.1  -2.7  -1.6   -.1   2.8   6.1  -1.0      6.4
   Energy commodities.......   1.3  -6.2  -2.7    .0   6.1  12.6  -2.3     10.8
    Gasoline (all types)....   1.2  -6.4  -2.8    .0   6.3  13.1  -2.4     10.8
    Fuel oil (1)............   -.3  -2.8  -3.7  -2.0   2.9   8.2   2.3     11.7
   Energy services..........    .9    .7   -.5   -.2   -.1   -.2    .4      2.2
    Electricity.............    .6    .3   -.6    .4    .0    .0    .5      2.0
    Utility (piped) gas                                                        
       service..............   2.2   1.9   -.2  -2.3   -.5   -.8    .3      3.2
  All items less food and                                                      
     energy.................    .1    .1    .1    .1    .2    .1    .2      1.8
   Commodities less food and                                                   
      energy commodities....   -.2   -.3   -.1   -.1   -.1   -.2    .1     -1.0
    New vehicles............   -.2   -.2   -.3   -.5    .0   -.4   -.2     -1.4
    Used cars and trucks....   -.5   -.2   -.7   -.5   -.2   -.2    .7     -2.9
    Apparel.................   -.3   -.8   -.1    .3    .1   -.1   -.1      -.6
    Medical care commodities   -.8    .4    .7   1.0   -.1   -.8    .0       .9
   Services less energy                                                        
      services..............    .1    .2    .2    .2    .4    .2    .3      2.7
    Shelter.................    .3    .2    .2    .1    .5    .3    .3      3.2
    Transportation services    -.2    .3    .2    .2    .4    .3    .2      4.2
    Medical care services...    .0   -.1    .3    .3    .2    .1    .3      1.9

   1 Not seasonally adjusted.

Food

The food index was unchanged in October following slight increases in August and
September. The index for food at home was unchanged for the second month in a 
row. Among the major grocery store food group indexes, the index for meats, 
poultry, fish, and eggs was the only one to rise, increasing 0.6 percent after 
a decline in September. The increase was largely caused by the index for eggs,
which increased 6.7 percent; the index for beef declined 0.8 percent.

The index for cereals and bakery products fell 0.5 percent, its largest decline
since November 2015. The indexes for dairy and related products and for other
food at home also declined in October. The indexes for fruits and vegetables
and for nonalcoholic beverages were both unchanged in October.

The index for food at home rose 0.6 percent over the past year. The index for
meats, poultry, fish, and eggs rose 1.5 percent over the span. The indexes for
cereals and bakery products and for dairy and related products both declined
over the past year. The index for food away from home rose 0.1 percent in
October and increased 2.3 percent over the past year. 

Energy

The energy index decreased 1.0 percent in October following increases in August
and September. The gasoline index, which rose 13.1 percent in September, fell 2.4
percent in October. (Before seasonal adjustment, gasoline prices decreased
5.4 percent in October.) The electricity index increased in October, rising 0.5
percent, and the index for natural gas rose 0.3 percent in October after
falling in each of the last four months. 

All the major energy component indexes rose over the past 12 months. The
gasoline index increased 10.8 percent, the index for natural gas advanced 3.2
percent, and the electricity index increased 2.0 percent. 

All items less food and energy

The index for all items less food and energy increased 0.2 percent in October
after a 0.1-percent increase in September. The shelter index rose 0.3 percent,
with the indexes for rent and owners' equivalent rent also rising 0.3 percent.
The index for lodging away from home continued to increase, rising 1.6 percent.
The medical care index rose 0.3 percent, with the index for hospital services
rising 0.5 percent and the physicians' services index increasing 0.2 percent.
However, the index for prescription drugs declined 0.2 percent. 

The index for used cars and trucks rose in October, increasing 0.7 percent;
this ended a streak of nine consecutive declines. The tobacco index rose in
October, increasing 1.6 percent. The education index increased 0.3 percent,
and the index for wireless telephone services rose 0.4 percent. The indexes
for personal care, airline fares, and motor vehicle insurance also increased
in October.

The index for new vehicles continued to decline, falling 0.2 percent in October
after a 0.4-percent decrease in September. The index for apparel declined 0.1
percent in October, the same decline as in September; the recreation index also
fell 0.1 percent. The index for household furnishings and operations was
unchanged in October after declining in 5 of the 6 prior months. 

The index for all items less food and energy rose 1.8 percent over the past 12
months. The shelter index rose 3.2 percent over that span; the 12-month increase
in the shelter index has now been either 3.2 or 3.3 percent for 6 months in a
row. The index for motor vehicle insurance increased 8.2 percent over the past
12 months, but several transportation indexes declined over the span, including
new vehicles, used cars and trucks, and airline fares.  

Not seasonally adjusted CPI measures

The Consumer Price Index for All Urban Consumers (CPI-U) increased 2.0 percent
over the last 12 months to an index level of 246.663 (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 2.1 percent over the last 12 months to an index level of 240.573
(1982-84=100). For the month, the index decreased 0.2 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 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.  

The Consumer Price Index for November 2017 is scheduled to be released on 
Wednesday, December 13, 2017, at 8:30 a.m. (EST).

----------------------------------------------------------------------------------
                   Consumer Price Index Geographic Revision for 2018

 In January 2018, BLS will introduce a new geographic area sample for the Consumer 
 Price Index (CPI). The 2018 revision utilizes the 2010 Decennial Census and 
 incorporates an updated area sample design, changes the frequency of publication 
 for several local area indexes, and establishes some new local area and aggregate 
 indexes. The first indexes using the new structure will be published in February 
 2018. Additional information on the geographic revision is available at: 
 https://www.bls.gov/cpi/additional-resources/geographic-revision-2018.htm. 
 ----------------------------------------------------------------------------------

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 89 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 87 urban
areas across the country from about 6,000 housing units and approximately
24,000 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 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 27 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/2016.pdf. 

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  8.0/225.000 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 Fact Sheet on Seasonal Adjustment at
https://www.bls.gov/cpi/seasonal-adjustment/questions-and-answers.htm and the 
Timeline of Seasonal Adjustment Methodological Changes at 
https://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 2017, BLS adjusted 40 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 2017, revised seasonal factors and seasonally 
adjusted indexes for 2012 to 2016 were calculated and published. For series 
which are directly adjusted using the Census X-13ARIMA-SEATS seasonal adjustment
software, the seasonal factors for 2016 will be applied to data for 2017 to 
produce the seasonally adjusted 2017 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-seven of the 81
components of the U.S. city average all items index are not seasonally adjusted
for 2017.

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.