Transmission of material in this release is embargoed until 8:30 a.m. (ET) January 13, 2021 USDL-21-0024 Technical information: (202) 691-7000 • firstname.lastname@example.org • www.bls.gov/cpi Media Contact: (202) 691-5902 • PressOffice@bls.gov CONSUMER PRICE INDEX – DECEMBER 2020 (NOTE: This news release was reissued January 19, 2021, correcting 29 seasonally adjusted CPI-U special relative series in tables 2 and 6. Additional information is available at www.bls.gov/errata/home.htm?errataID=82899.) The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in December on a seasonally adjusted basis after rising 0.2 percent in November, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.4 percent before seasonal adjustment. The seasonally adjusted increase in the all items index was driven by an 8.4-percent increase in the gasoline index, which accounted for more than 60 percent of the overall increase. The other components of the energy index were mixed, resulting in an increase of 4.0 percent for the month. The food index rose in December, as both the food at home and the food away from home indexes increased 0.4 percent. The index for all items less food and energy increased 0.1 percent in December after rising 0.2 percent in the previous month. The indexes for apparel, motor vehicle insurance, new vehicles, personal care, and household furnishings and operations all rose in December. The indexes for used cars and trucks, recreation, and medical care were among those to decline over the month. The all items index rose 1.4 percent for the 12 months ending December, a slightly larger increase than the 1.2-percent rise reported for the period ending November. The index for all items less food and energy rose 1.6 percent over the last 12 months, as it did in the periods ending October and November. The food index rose 3.9 percent over the last 12 months, while the energy index fell 7.0 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 2020 2020 2020 2020 2020 2020 2020 Dec. 2020 All items.................. .6 .6 .4 .2 .0 .2 .4 1.4 Food...................... .6 -.4 .1 .0 .2 -.1 .4 3.9 Food at home............. .7 -1.1 -.1 -.4 .1 -.3 .4 3.9 Food away from home (1).. .5 .5 .3 .6 .3 .1 .4 3.9 Energy.................... 5.1 2.5 .9 .8 .1 .4 4.0 -7.0 Energy commodities....... 11.7 5.3 2.0 -.1 -.5 -.2 8.2 -15.2 Gasoline (all types).... 12.3 5.6 2.0 .1 -.5 -.4 8.4 -15.2 Fuel oil................ 10.2 4.3 3.9 -5.3 -.3 3.6 10.0 -20.0 Energy services.......... -.2 .0 -.2 1.6 .8 1.1 .1 2.6 Electricity............. -.3 .3 -.2 .9 1.2 .5 .4 2.2 Utility (piped) gas service.............. .0 -1.0 -.2 4.2 -.7 3.1 -.8 4.1 All items less food and energy................. .2 .6 .4 .2 .0 .2 .1 1.6 Commodities less food and energy commodities.... .2 .7 1.0 .8 -.2 .1 .2 1.7 New vehicles............ .0 .8 .0 .3 .4 -.1 .4 2.0 Used cars and trucks.... -1.2 2.3 5.4 6.7 -.1 -1.3 -1.2 10.0 Apparel................. 1.7 1.1 .6 -.5 -1.2 .9 1.4 -3.9 Medical care commodities .2 .0 -.1 .0 -.8 -.3 -.4 -2.5 Services less energy services.............. .3 .6 .2 .0 .1 .2 .1 1.6 Shelter................. .1 .2 .1 .1 .1 .1 .1 1.8 Transportation services 2.1 3.6 .0 -.9 .1 1.8 -.1 -3.5 Medical care services... .5 .5 .1 .0 -.3 -.1 -.1 2.8 1 Not seasonally adjusted. Food The food index increased 0.4 percent in December following a 0.1-percent decrease in November. The index for food at home increased 0.4 percent after declining in November. Major grocery store food group indexes were mixed over the month. The index for other food at home rose 0.7 percent in December after falling 0.6 percent in November. The nonalcoholic beverages index increased 1.1 percent after a 0.9- percent decline in the previous month. The index for dairy and related products rose 0.8 percent in December, and the index for cereals and bakery products increased 0.4 percent over the month. The index for meats, poultry, fish, and eggs declined 0.2 percent in December, following a 0.1-percent increase the previous month. The index for fruits and vegetables also declined 0.2 percent over the month. The index for food away from home rose 0.4 percent in December, after rising 0.1 percent in November. The index for limited service meals rose 0.5 percent, while the index for full service meals increased 0.3 percent. The food at home index increased 3.9 percent over the past 12 months. All six major grocery store food group indexes increased over the period. The largest increase was the meats, poultry, fish, and eggs index which rose 4.6 percent as the beef index increased 5.3 percent. The smallest increases were for the cereals and bakery products and the fruits and vegetables indexes, which both increased 3.2 percent over the last 12 months. The index for food away from home rose 3.9 percent over the last year. The index for limited service meals rose 6.0 percent and the index for full service meals rose 3.0 percent over the span. Energy The energy index rose for the seventh month in a row in December, increasing 4.0 percent. The largest contribution to this increase was the gasoline index, which increased 8.4 percent in December after declining in the previous 2 months. (Before seasonal adjustment, gasoline prices rose 3.4 percent in December.) The index for electricity rose 0.4 percent over the month, while the index for natural gas fell 0.8 percent. Despite the monthly increase, the energy index fell 7.0 percent over the past 12 months. Energy commodity indexes fell sharply over the period, with the fuel oil index declining 20.0 percent and the gasoline index decreasing 15.2 percent. Energy service indexes rose over the last 12 months, with the index for natural gas increasing 4.1 percent and the index for electricity rising 2.2 percent. All items less food and energy The index for all items less food and energy rose 0.1 percent in December after rising 0.2 percent in November. The shelter index rose 0.1 percent in December, the fifth 0.1-percent increase in a row for that index. The indexes for rent and owners’ equivalent rent both increased 0.1 percent in December, after both were unchanged in November. The index for lodging away from home was unchanged in December after rising sharply in November. The index for apparel increased 1.4 percent in December, as did the index for motor vehicle insurance. The index for personal care and the index for new vehicles both rose 0.4 percent over the month after falling 0.1 percent the previous month. The index for household furnishings and operations increased 0.2 percent in December after rising 0.7 percent in November. The index for used cars and trucks declined for the third consecutive month, falling 1.2 percent in December. The recreation index fell 0.3 percent in December, ending a string of 4 consecutive monthly increases. The index for medical care continued to decline in December, falling 0.2 percent after decreasing 0.1 percent in November. The index for prescription drugs declined 0.4 percent over the month, while the index for hospital services rose 0.3 percent in December, and the index for physicians’ services was unchanged. The index for all items less food and energy rose 1.6 percent over the past 12 months. The shelter index rose 1.8 percent over the last 12 months. The used cars and trucks index increased 10.0 percent over the last 12 months and the medical care index increased 1.8 percent. Indexes which declined over the past 12 months included the indexes for airline fares, apparel, lodging away from home, and motor vehicle insurance. Not seasonally adjusted CPI measures The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.4 percent over the last 12 months to an index level of 260.474 (1982-84=100). For the month, the index increased 0.1 percent prior to seasonal adjustment. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 1.4 percent over the last 12 months to an index level of 254.081 (1982-84=100). For the month, the index rose 0.1 percent prior to seasonal adjustment. The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) increased 1.2 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 past 10 to 12 months are subject to revision. Year in Review (December to December) The all items CPI-U rose 1.4 percent in 2020. This was smaller than the 2019 increase of 2.3 percent and the smallest December-to-December increase since the 0.7-percent rise in 2015. The index rose at a 1.7-percent average annual rate over the last 10 years. The food index increased 3.9 percent in 2020, a larger increase than the 2019 rise of 1.8 percent. The index for food at home also increased 3.9 percent in 2020, a larger increase than the 0.7-percent increase reported for 2019. Over the last 10 years, the food index rose at a 2.0-percent average annual rate, and the food at home index increased at a 1.5-percent average annual rate. All six major grocery store food group indexes rose in 2020. The index for meats, poultry, fish, and eggs rose 4.6 percent in 2020 after rising 2.3 percent in 2019. Similarly, the dairy and related products index increased 4.4 percent in 2020 after increasing 2.4 percent in 2019. The index for nonalcoholic beverages also increased by 4.4 percent in 2020, while the index for other food at home rose 3.9 percent over the year. The cereals and bakery products and the fruits and vegetables indexes both increased 3.2 percent in 2020. The index for food away from home rose 3.9 percent in 2020, a somewhat larger increase than the 3.1 percent increase in 2019 and the largest December-to- December rise since 2008. The food away from home index increased at a 2.7- percent average annual rate over the last 10 years. The energy index decreased 7.0 percent in 2020 after increasing 3.4 percent in 2019. The index for gasoline fell 15.2 percent in 2020 after rising 7.9 percent the previous year. The index for fuel oil fell 20.0 percent in 2020. These declines more than offset increases in the other energy component indexes. The index for natural gas rose 4.1 percent in 2020 after falling 3.5 percent in 2019, while the index for electricity increased 2.2 percent over the year after declining 0.4 percent in the previous year. The energy index decreased at a 0.9-percent average annual rate since December 2010. The index for all items less food and energy rose 1.6 percent in 2020, a smaller increase than the 2.3- percent increase reported for 2019, and smaller than the 2.0-percent average annual rate over the past 10 years. The shelter index rose 1.8 percent, the smallest December-to-December increase since 2010. The index for rent increased 2.3 percent in 2020, while the index for owners’ equivalent rent increased 2.2 percent. The index for household furnishings and operations increased 3.2 percent in 2020 after increasing 1.0 percent in 2019. In contrast, the index for lodging away from home fell 9.5 percent in 2020, the largest December-to-December decrease ever reported for that index, which dates to December 1997. The medical care index increased 1.8 percent in 2020, a smaller increase than the 4.6-percent increase reported for 2019. The index for hospital services rose 3.0 percent in 2020, the same increase as in 2019. The physicians’ services index rose 1.7 percent over the year. The index for prescription drugs, in contrast, fell 2.4 percent in 2020 after rising 3.0 percent in 2019. The medical care index increased at a 2.8-percent average annual rate over the last decade. The index for used cars and trucks increased 10.0 percent in 2020, the largest December-to-December increase reported for that index since 1983. The new vehicles index rose 2.0 percent in 2020 after rising 0.1 percent in 2019. The index for motor vehicle insurance fell 4.8 percent over the year after being unchanged in 2019, the largest December-to-December decrease in that index since 1955. The communication index increased 2.4 percent in 2020, a larger increase than the 0.7-percent increase reported in 2019. The index for education increased 1.4 percent over the year, less than the 2.1-percent increase in the previous year. The personal care index increased 1.8 percent in 2020, while the recreation index increased 0.9 percent. The index for tobacco increased 5.1 percent over the year, and the index for alcoholic beverages increased 2.8 percent. The index for airline fares declined 18.4 percent in 2020, the largest December-to-December decrease ever reported for that index, which was first published in December 1964. The apparel index continued to decline for the seventh consecutive year, falling 3.9 percent. _______________ The Consumer Price Index for January 2021 is scheduled to be released on Wednesday, February 10, 2021 at 8:30 a.m. (ET). --------------------------------------------------------------------------------------------------- Coronavirus (COVID-19) Pandemic Impact on December 2020 Consumer Price Index Data Data collection by personal visit for the Consumer Price Index (CPI) program has been suspended since March 16, 2020. When possible, data normally collected by personal visit were collected either online or by phone. Additionally, data collection in December was affected by the temporary closing or limited operations of certain types of establishments. These factors resulted in an increase in the number of prices considered temporarily unavailable and imputed. While the CPI program attempted to collect as much data as possible, many indexes are based on smaller amounts of collected prices than usual, and a small number of indexes that are normally published were not published this month. Additional information is available at www.bls.gov/covid19/effects-of-covid-19-pandemic-on-consumer-price-index.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 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 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. The factors are available at www.bls.gov/cpi/tables/seasonal-adjustment/seasonal-factors-2020.pdf. 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 for January 2020, BLS adjusted 53 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 2020, revised seasonal factors and seasonally adjusted indexes for 2015 to 2019 were calculated and published. For series which are directly adjusted using the Census X-13ARIMA-SEATS seasonal adjustment software, the seasonal factors for 2019 will be applied to data for 2020 to produce the seasonally adjusted 2020 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-eight of the 81 components of the U.S. city average all items index are not seasonally adjusted for 2020. 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 email@example.com. For additional information on seasonal adjustment in the CPI visit www.bls.gov/cpi/seasonal-adjustment/home.htm or contact the CPI seasonal adjustment section at 202-691-6968 or firstname.lastname@example.org. 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.