Focus on Economic Data: Consumer Price Index and Inflation, November 17, 2010
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Each month, the U.S. Bureau of Labor Statistics (BLS) releases an estimate of the level of the consumer price index (CPI) and the rate of inflation in the United States for the previous month. The report provides the most recent current and seasonally adjusted consumer price indexes for all urban consumers, urban wager earners, and the chained index, plus a breakdown by major expenditure groups. The BLS also collects price level data for major metropolitan areas and regions.
This lesson focuses on the November 17, 2010, BLS press release of data on the consumer price index for the month of October, 2010.
For the latest updates on U.S. economic indicators, go to:
- EconomicIndicators.gov: http://economicindicators.gov/
- BLS Economic Indicators: www.bls.gov/bls/newsrels.htm#major
- BEA Economic Indicators: www.bea.gov/newsreleases/glance.htm
- Identify the rate and change in the consumer price index and rate of inflation in the United States in October, 2010.
- Identify factors that have influenced recent changes in the price level.
- Describe how inflation impacts different groups in the economy.
- Distinguish between the CPI-U, core rate and other measures of inflation.
The Bureau of Labor Statistics news release about the consumer price index (CPI-U) for the month of October 2010 was very much like the CPI news releases in several previous months. The BLS reported a very moderate rise in the general price level, and then commented on the key role that energy prices played in the determination of the price index for the month of October.
U.S.Bureau of Labor Statistics News Release
Consumer Price Index - October 2010
Released November 17, 2010
“The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 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 increased 1.2 percent before seasonal adjustment.”
“As has frequently been the case in recent months, an increase in the energy index was the major factor in the all items seasonally adjusted increase. The gasoline index rose for the fourth month in a row and accounted for almost 90 percent of the all items increase; the household energy index rose as well.”
The overall CPI-U increase was primarily due to the increase in energy prices in October. Did you notice the jump in gasoline prices last month? The CPI added 0.2 percent for the month, but after factoring out energy and food (the core index), there was no significant change. The BLS commented, “The index for all items less food and energy was unchanged in October, the third month in a row with no change.”
What categories of consumer prices changed in October?
Figure 1, below, shows the price level changes for the spending categories of the CPI market basket that increased and decreased on the month of October. Do you see any patterns?
Figure 1: CPI-U Price Level Changes by Spending Category
12 mos. ended
|These spending category price levels increased in October:|
|Food at home||.3||.0||1.4|
|Food away from home (1)||.3||.1||1.4|
|Gasoline (all types)||1.6||4.6||9.5|
|All items less food and energy||.0||.0||.6|
|Medical care commodities||.3||.1||2.5|
|Services less energy services||.1||.1||.8|
|Medical care services||.8||.2||3.6|
|These spending category price levels decreased in October:|
|Utility (paid) gas service||-2.3||-.4||1.9|
|All items less food and energy||.0||.0||.6|
|Commodities less food/energy commodities||-.2||-.2||.1|
|Used cars and trucks||-.7||-.9||8.6|
|(1) = not seasonally adjusted|
Some Prices Go Up
Look again at energy commodities, gasoline, and fuel oil. If many people in your region heat their homes with fuel oil, their budgets were hit hard by this month’s price increase. Did they think ahead and buy fuel oil in September?
Those who drive long distances commuting to work or who drove to grandma’s house for Thanksgiving dinner may have felt the October price change a little more than others.
Some Prices Go Down
As usual, some price categories decreased. Why do you think use car and apparel prices decreased in October? It must have something to do with supply and demand!
How the overall price level change affects each individual is determined by their individual consumption pattern. Remember, the CPI is a “market basket” of goods and services that reflects typical consumer purchasing. The impact will be significant different between demographic and geographic groups.
The Level of the CPI-U in October 2010
The CPI-U for October 2010 was 218.879. That is an increase of 50.7 cents from September. Remember, the level of the CPI-U is relative to the base year level of 100. The base year for most of the spending categories is the period of 1982-84. That means the market basket of goods and services cost $100 in 1983-84.
How much inflation have we experienced since 1982-84? The CPI-U index has increased by 118.879 points, so the price level has slightly more than doubled in that period of time, a 118% increase in 26 years. Simply put, it has increased by an average of about 4 ½ percent per year.
Figure 2, below, shows the monthly changes in the CPI-U from 2002 through October 2010. Note the great variations of change over the time period. Note the spikes of monthly changes over one percent in September, 2005 and in June, 2008. More recently, note the three month period of 0.7 percent monthly price level decreases in 2008. At that time, deflation, a sustained drop in the price level was a serious concern for many economist, financial analysts, and planners.
For more detailed price index data for October, 2010, see Table 2 of the BLS news release. Consumer Price Index Data for October 2010. www.bls.gov/news.release/cpi.t02.htm
Use the BLS "Inflation Calculator" to determine how much the CPI has changed since the year you were born. LINK: http://data.bls.gov/cgi-bin/cpicalc.pl 
First, take a guess. How much do you think consumer prices have changed in your lifetime? Put your year of birth into the calculator and hit "calculate" to find out the answer.
Not Seasonally Adjusted CPI measures
The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.2 percent over the last 12 months to an index level of 218.711 (1982-84=100). For the month, the index rose 0.1 percent prior to seasonal adjustment.
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 1.5 percent over the last 12 months to an index level of 214.623 (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 1.0 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 post-2008 period are subject to revision.
BLS Note on Seasonal Adjustment
“Because price data are used for different purposes by different groups, the Bureau of Labor Statistics publishes seasonally adjusted as well as unadjusted changes each month. For analyzing general 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 changing climatic conditions, production cycles, model changeovers, holidays, and sales.”
“The unadjusted data are of primary interest to consumers concerned about the prices they actually pay. Unadjusted data also are 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.”
For more information, go to the CPI home page at www.bls.gov/cpi/ or contact the CPI Information and Analysis Section at (202) 691-7000 begin_of_the_skype_highlighting (202) 691-7000 begin_of_the_skype_highlighting (202) 691-7000 end_of_the_skype_highlighting begin_of_the_skype_highlighting (202) 691-7000 end_of_the_skype_highlighting begin_of_the_skype_highlighting (202) 691-7000 end_of_the_skype_highlighting begin_of_the_skype_highlighting (202) 691-7000 end_of_the_skype_highlighting begin_of_the_skype_highlighting (202) 691-7000 end_of_the_skype_highlighting begin_of_the_skype_highlighting (202) 691-7000 end_of_the_skype_highlighting end_of_the_skype_highlighting.
U.S. Regional Differences in Price Levels
The BLS also collects and reports consumer price level changes in four large regions of the United States and major metropolitan areas through its regional offices. Price levels will vary from region to region for a variety of reasons. The following are the BLS press releases on the regional consumer price indexes for October, 2010.
The BLS Regions
The Northeast - Connecticut, Maine, Massachusetts, New Hampshire, New York, New Jersey, Pennsylvania, Rhode Island, and Vermont.
“The Consumer Price Index for All Urban Consumers (CPI-U) in the Northeast region rose 0.3 percent in October, the U.S. Bureau of Labor Statistics reported today. Sheila Watkins, the Bureau’s regional commissioner, noted that the recent increase was largely due to a 2.2 percent advance in the energy index. Prices were also higher for both all items less food and energy (0.1 percent) and food (0.3 percent) over the month. Within the energy index, higher gasoline prices led the recent increase.”
“Over the last 12 months, the CPI-U increased 1.5 percent. The index for all items less food and energy rose 0.9 percent over the year. Prices were also higher for both energy (6.1 percent) and food (1.7 percent) since October 2009.”
The Midwest - Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin.
“The Consumer Price Index for All Urban Consumers (CPI-U) in the Midwest was unchanged in October the U.S. Bureau of Labor Statistics reported today. Regional Commissioner Charlene Peiffer noted that the indexes for food and all items less food and energy (each up 0.1 percent) registered little movement over the month and the index for energy decreased 1.8 percent. Within the index for all items less food and energy, apparel prices increased reflecting normal seasonal patterns while prices for used cars and trucks were among those that recorded declines.”
“Over the last 12 months the CPI-U rose 1.5 percent. The energy index, which includes motor fuel and household fuels, was up 8.4 percent since last October and the index for food rose 1.5 percent. Excluding food and energy, the CPI-U increased 0.6 percent over the year.”
The South - Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia.
The Consumer Price Index for All Urban Consumers (CPI-U) for the South was little changed, up 0.1 percent in October, the U.S. Bureau of Labor Statistics reported today. Sheila Watkins, the Bureau’s regional commissioner, noted that prices edged up for both energy and all items less food and energy, while food prices were unchanged. Within the all items less food and energy group, apparel and medical care were among those indexes that recorded increases.
Over the last 12 months, the CPI-U rose 1.3 percent. The index for all items less food and energy advanced 0.8 percent over the year.
The West – Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.
“Prices in the West region, as measured by the Consumer Price Index for All Urban Consumers (CPI-U), increased 0.1 percent in October, the U.S. Bureau of Labor Statistics reported today. Regional Commissioner Stanley W. Suchman noted that the special aggregate index for all items less food and energy was unchanged over the past month.”
“Over the last 12 months, the CPI-U rose 0.6 percent. Energy prices rose 4.5 percent, largely the result of an increase in the price of gasoline. The index for all items less food and energy edged up 0.1 percent since October 2009.”
Figure 3: Regional Price Level changes
Sept. 2010 to
Oct. 2009 to
Oct. 2009 to
Oct. 2009 to
Notice the differences between the CPI-U increases over the last year in the four regions. The Northeast experienced a larger increase than the other regions in October. The West had a much smaller CPI-U increase over the last year and a smaller increase in the core rate of inflation. The Midwest experienced a greater increase in energy prices. All four of the regional reports mentioned the significant impact of energy prices in the past year on their overall price level.
Take a look at the price level and inflation data for your region and/or your closest large metropolitan area. Go to the link to your region.
All regional data links: http://www.bls.gov/regions/cpi.asp
- West: www.bls.gov/ro9/cpiwest.htm
- South: www.bls.gov/ro6/fax/cpisouth.htm
- Midwest: www.bls.gov/ro7/cpimdw.htm
- Northeast: www.bls.gov/ro3/cpine.htm
International Price Level Comparisons
The BLS also publishes comparisons of price level data for the major industrialized nations; the United States, Canada, Japan, France, Germany, Italy, Sweden, Switzerland, and the United Kingdom. Link: ftp://ftp.bls.gov/pub/special.requests/ForeignLabor/flscpim.txt
Take a look at the most recent data for the nine nations. Figue 4, below, shows the consumer price indexes in the nine countries, by percent change from same period of previous year, for the years 1995 to 2010.
Figure 4: Consumer Price Index in 9 countries
% change from same period of previous year
What nations have expereinces more or less inflation than the United States?
Finding Additional Data and Details in the BLS Report
The monthly BLS CPI report includes links to additional price level data, including expenditure categories, regional and metropolitan area price data.
- Table 1. Consumer Price Index for All Urban Consumers (CPI-U): U. S. City Average, by expenditure category and commodity and service group 
- Table 2. Consumer Price Index for All Urban Consumers (CPI-U): Seasonally adjusted U. S. City Average, by expenditure category and commodity and service group 
- Table 3. Consumer Price Index for All Urban Consumers (CPI-U): Selected areas, all items index 
- Table 4. Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W): U. S. City Average, by expenditure category and commodity and service group 
- Table 5. Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W): Seasonally adjusted U. S. City Average, by expenditure category and commodity and service group 
- Table 6. Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W): Selected areas, all items index 
- Table 7. Chained Consumer Price Index for All Urban Consumers (C-CPI-U): U.S. city average, by expenditure category and commodity and service group 
The consumer price index for the United States has changed very little over the past month and year. Inflation has not been a significant factor, the exception being the somewhat erratic fluctuations of energy prices. As the U.S. economy slowly recovers and unemployment remains stubbornly high, there are few pressures in consumer prices to rise.
When economic growth returns and jobs are created, consumer demand for goods and servces may pressure the price level to rise. Some will see this as a good sign, as moderate inflation over time is a good sign for the economy.
Watch for possible Federal Reserve monetary policy actions to target some level of inflation.
Students are to complete a multiple choice assessment of the November 17, 2010, BLS "Consumer Price Index" announcement.
Next complete the essay question on the interactive notepad below.
1. Which do you think is a more meaningful measurement of consumer prices over time - the CPU-U for all items or the "core rate" (minus energy and food)?
10 gal of regular gasoline
2 "first run" move ticket
2 #3 "Extra Value" Meals
1 pair of Levis 501 jeans
What do you think has happened to the prices of the items in your "market basket" in the past year?
What do you think will happen to those prices in the coming year?
Does taking the food and energy items out of your basket make a difference?