Consumer Price Index Summary

Transmission of material in this release is embargoed until                                        
8:30 a.m. (EST) January 12, 2018               USDL-18-0039 

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

CONSUMER PRICE INDEX – DECEMBER 2017

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent
in December 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.

An increase of 0.4 percent in the shelter index accounted for almost 80 percent
of the 1-month all items increase. The food index rose in December, with the
indexes for food at home and food away from home both increasing. The energy
index, which rose sharply in November, declined in December as the gasoline
index decreased. 

The index for all items less food and energy increased 0.3 percent in December,
its largest increase since January 2017. Along with the shelter index, the indexes
for medical care, used cars and trucks, new vehicles, and motor vehicle insurance
were among those that increased in December. The indexes for apparel, airline fares,
and tobacco all declined over the month. 

The all items index rose 2.1 percent for the 12 months ending December, compared to
2.2 percent for the 12 months ending November. The index for all items less food and
energy increased 1.8 percent over the last year; the 12-month change has now been
either 1.7 or 1.8 percent for eight consecutive months. The food index rose 1.6 percent
over the past year; the index for energy increased 6.9 percent, with all of its major
component indexes rising during 2017. 

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 
                              2017  2017  2017  2017  2017  2017  2017   Dec.  
                                                                         2017  
                                                                               
                                                                               
 All items..................    .0    .1    .4    .5    .1    .4    .1      2.1
  Food......................    .0    .2    .1    .1    .0    .0    .2      1.6
   Food at home.............   -.1    .2   -.2    .0    .0   -.1    .1       .9
   Food away from home (1)..    .0    .2    .3    .3    .1    .2    .2      2.5
  Energy....................  -1.6   -.1   2.8   6.1  -1.0   3.9  -1.2      6.9
   Energy commodities.......  -2.7    .0   6.1  12.6  -2.3   7.1  -2.5     10.8
    Gasoline (all types)....  -2.8    .0   6.3  13.1  -2.4   7.3  -2.7     10.7
    Fuel oil (1)............  -3.7  -2.0   2.9   8.2   2.3   5.0   3.0     15.2
   Energy services..........   -.5   -.2   -.1   -.2    .4    .6    .3      3.1
    Electricity.............   -.6    .4    .0    .0    .5    .5    .1      2.6
    Utility (piped) gas                                                        
       service..............   -.2  -2.3   -.5   -.8    .3    .6   1.2      4.7
  All items less food and                                                      
     energy.................    .1    .1    .2    .1    .2    .1    .3      1.8
   Commodities less food and                                                   
      energy commodities....   -.1   -.1   -.1   -.2    .1   -.1    .2      -.7
    New vehicles............   -.3   -.5    .0   -.4   -.2    .3    .6      -.5
    Used cars and trucks....   -.7   -.5   -.2   -.2    .7   1.0   1.4     -1.0
    Apparel.................   -.1    .3    .1   -.1   -.1  -1.3   -.5     -1.6
    Medical care commodities    .7   1.0   -.1   -.8    .0    .6   1.0      2.3
   Services less energy                                                        
      services..............    .2    .2    .4    .2    .3    .2    .3      2.6
    Shelter.................    .2    .1    .5    .3    .3    .2    .4      3.2
    Transportation services     .2    .2    .4    .3    .2    .1    .3      3.7
    Medical care services...    .3    .3    .2    .1    .3   -.1    .2      1.6

   1 Not seasonally adjusted.



Food

The food index increased 0.2 percent in December. The index for food at home rose
0.1 percent, largely due to a 0.9-percent increase in the index for meats, poultry,
fish, and eggs, its largest increase since June 2015. The index for cereals and
bakery products also rose in December, increasing 0.2 percent after a 0.2-percent
decline in November. 

The remaining major grocery store food group indexes declined in December. The index
for dairy and related products fell 0.4 percent in December after rising in November.
The index for fruits and vegetables declined 0.2 percent, and the indexes for
nonalcoholic beverages and other food at home both fell 0.1 percent. 

The index for food away from home rose 0.2 percent in December, the same increase as
in November. Over the last 12 months, the food at home index rose 0.9 percent, and the
index for food away from home increased 2.5 percent.

Energy

The energy index declined 1.2 percent in December following a 3.9-percent increase in
November. The gasoline index fell 2.7 percent in December after rising 7.3 percent in
November. (Before seasonal adjustment, gasoline prices decreased 3.3 percent in December.)
The electricity index increased 0.1 percent in December. The index for natural gas increased
1.2 percent, its largest increase since May 2017.   

All the major energy component indexes increased over the past 12 months. The gasoline index
rose 10.7 percent, the electricity index advanced 2.6 percent, and the index for natural gas
increased 4.7 percent.  

All items less food and energy

The index for all items less food and energy increased 0.3 percent in December and rose
1.8 percent over the last 12 months. The shelter index rose 0.4 percent in December following a
0.2-percent increase in November. The rent index increased 0.4 percent over the month, and the
index for owners' equivalent rent advanced 0.3 percent. The index for lodging away from home
increased 0.8 percent after falling in November. 

The medical care index increased 0.3 percent in December. The index for prescription drugs rose
1.0 percent in December after increasing 0.6 percent in November. The indexes for hospital
services and physicians' services also increased, both rising 0.3 percent. The index for used
cars and trucks also rose in December, increasing 1.4 percent. The new vehicles index rose
0.6 percent in December following a 0.3-percent increase in November; the index for motor vehicle
insurance also increased 0.6 percent. The indexes for education, communication, and recreation all
increased 0.1 percent in December.

In contrast, the apparel index fell 0.5 percent in December, its fourth consecutive decline. The
tobacco index fell 0.6 percent in December after rising in each of the prior 3 months. The index
for airline fares fell 0.5 percent after a 2.4-percent decrease the prior month. The indexes for
household furnishings and operations and for personal care were both unchanged in December.   
 

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 246.524 (1982-84=100). For the month, the index declined
0.1 percent prior to seasonal adjustment.  

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased
2.2 percent over the last 12 months to an index level of 240.526 (1982-84=100). For the month,
the index declined 0.1 percent prior to seasonal adjustment.  

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) increased 2.0 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 2.1 percent in 2017, the same increase as in 2016, but larger than the 2014
and 2015 increases. It was also larger than the 1.6-percent average annual increase over the past
10 years. 

The food index, which declined 0.2 percent in 2016, increased 1.6 percent in 2017. The index for
food at home rose 0.9 percent in 2017 after falling in 2015 and 2016. 

The six major grocery store food group indexes were mixed in 2017, with three increases, two
declines, and one unchanged. The index for meats, poultry, fish, and eggs increased 2.8 percent
after declining in 2015 and 2016. The beef index rose 3.5 percent in 2017, and the index for eggs
increased 11.6 percent. The index for fruits and vegetables rose 1.5 percent in 2017 after falling
2.4 percent in 2016. The index for other food at home also increased in 2017, rising 0.5 percent. 

The index for cereals and bakery products fell 0.6 percent in 2017, similar to its 0.7-percent
decline the prior year. The index for dairy and related products fell 0.5 percent in 2017, its
third consecutive yearly decrease. The index for nonalcoholic beverages was unchanged in 2017
after falling in 2016.  

The index for food away from home rose 2.5 percent in 2017 after a 2.3-percent increase the prior
year. Over the last 10 years, the food index rose at an annual rate of 2.0 percent. The food at
home index rose at a 1.5-percent rate, and the index for food away from home increased at a
2.6-percent rate since December 2007. 

The energy index rose 6.9 percent in 2017 after a 5.4-percent increase in 2016. The gasoline index
increased 10.7 percent in 2017 following a 9.1-percent increase in 2016. The index for natural gas
also increased for the second straight year, rising 4.7 percent in 2017 after increasing 7.8 percent
in 2016. The electricity index increased 2.6 percent in 2017 after rising 0.7 percent in 2016.
Despite the recent increases, the energy index declined at a 0.5-percent annual rate over the past
10 years.  

The index for all items less food and energy rose 1.8 percent in 2017, a smaller increase than its
2.2-percent rise in 2016. The shelter index rose 3.2 percent in 2017 following a 3.6-percent
increase in 2016. The rent index rose 3.7 percent in 2017, while the index for owners' equivalent
rent increased 3.2 percent. 

The medical care index increased 1.8 percent in 2017, a substantial deceleration from its 4.1-percent
increase in 2016. The index for prescription drugs rose 2.8 percent in 2017. The index for hospital
services rose 5.1 percent, while the physicians' services index declined 1.8 percent. 

The index for motor vehicle insurance rose 7.9 percent in 2017 following a 7.0-percent increase in
2016. The index for new vehicles fell 0.5 percent in 2017 after rising modestly in previous years;
the index for used cars and trucks declined 1.0 percent after a 3.5-percent decline the prior year.     
 
The education index increased 2.0 percent in 2017, the smallest annual increase in the history of
the index, which dates to 1993. The index for communication declined 4.9 percent in 2017, its
eighth consecutive yearly decline. The recreation index rose 1.5 percent, and the index for personal
care increased 0.9 percent. The index for tobacco increased 6.5 percent, and the alcoholic beverages
index rose 1.4 percent. 

The index for airline fares decreased 4.0 percent in 2017, its fifth consecutive yearly decline.
The apparel index fell 1.6 percent, its fourth straight annual decrease. The index for household
furnishings and operations also continued to fall, declining 0.8 percent in 2017 after falling
1.1 percent the prior year.  
	

The Consumer Price Index for January 2018 is scheduled to be released on Wednesday, February 14,
2018, 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    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 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.  


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Last Modified Date: January 12, 2018