REVISIONS IN JANUARY TO AUGUST 2000 CPI DATA
The Bureau of Labor Statistics (BLS) is reissuing Consumer Price Index (CPI) data for the January to August 2000 period to correct
an error recently uncovered in the software used to calculate the Rent of
Primary Residence and Owners' Equivalent Rent of Primary Residence
components of the index. Correcting this error increases previously
published values for those components and for index series that include
those components, in selected local areas as well as at the U.S. City Average
The affected series include the U.S. City Average All Items CPIs for All
Urban Consumers (CPI-U) and for Urban Wage Earners and Clerical Workers
(CPI-W). The attached tables show, at the U.S. average level, the revised
CPI-U and CPI-W monthly values for the first eight months of 2000 for the
All Items, All Items less Food and Energy, and Housing series. Each of the
recalculated All Items CPI-U and CPI-W values for the first eight months of
2000 is higher than the value originally published by 0.1 index point,
except for the May and July CPI-U values, which are now 0.2 index point
higher. (Because published index values are rounded to one decimal place,
the size of the difference between the previously published and the
recalculated index values varies from month to month.) Between December
1999 and August 2000, the corrected CPI-U rose 2.7 percent, compared with
an increase of 2.6 percent in the series as originally published.
The error occurred with the introduction of the new housing sample and calculation
procedures beginning in January 1999. The error was in the calculation of
quality adjustments when housing units in the CPI Rent and Owners' Equivalent
Rent samples reported changes in air conditioning (AC) equipment. When a
housing unit changed from having no AC or a non-central type of AC to having
central AC, an adjustment was applied automatically. Specifically, the value
of central AC was subtracted from the current period rental price to make it
consistent with the price in the previous period (a negative adjustment to
the current period price). Conversely, when the AC equipment in a housing
unit changed from central AC to no AC or non-central AC, the value of central
AC should have been added to the current period rental price
(a positive adjustment to the current period price). The computer estimation
system in use beginning in January 1999 applied a negative adjustment in
both cases, leading to a small understatement of index growth.
The error was first identified in June of this year, when a CPI Housing
analyst was reviewing the data over time for a particular housing unit.
The analyst noted that the adjustment to the rental price for the unit was
negative when the AC equipment changed from non-central AC to central AC
(which is correct), but also was negative when the AC equipment subsequently
changed back from central AC to non-central AC (which is incorrect).
Following the identification of this error, time was required to determine
its cause, to realize its significance, and to identify the correct solution.
The process of calculating the correct index values going back to the first
month in which the problem occurred consumed a substantial additional amount
of time. Once the index recalculations were completed, the recalculated
data were evaluated in the context of BLS guidelines for issuing corrections
to previously published CPI data.
The impact of the software error was substantially exacerbated by an
improbably large number of reported changes in the AC status of individual
rental units. In many of these cases, reported changes in AC status were
reversed in subsequent reporting periods. The high level of reported
changes led us to conclude that this information was not being reported
accurately. As a result, the recalculations to correct for the error were
carried out by eliminating all adjustments made for changes in AC status
over the period.
Although some index values in the January to December 1999 period were
affected by the error, no revisions to data for this period will be
published. Changes to the overall, or all items, index at the national
average level during this period were not large enough to warrant
re-publication under BLS policy, as in no month of 1999 did the overstatement
in the overall index exceed 0.1 index point. There is, moreover, a
presumption in BLS policy and practice against revisions to the CPI that
extend back over lengthy periods.
Unlike many statistical series, the CPI is in final form when first
issued. This, however, does not mean that it is never revised. During the
last 10 years, for example, corrections have been made 7 times, generally
as a result of reporting errors. None of these corrections led to any
revisions of the All Items index at the U.S. level. The last time that the U.S. City Average All
Items CPI was revised was in December 1974, when the values for the months
of April through October were recalculated and released with issuance of the
The Bureau of Labor Statistics is acutely aware that it did not meet its
standards for accuracy and reliability in this case. The error occurred
despite a number of processes designed to ensure the production of accurate
CPI data. The BLS will undertake a rigorous review of this error in order
to identify and correct weaknesses in these processes, with particular focus
on four important areas: the procedures for the development and review of
requirements for new software applications; the procedures for acceptance
testing of these applications; the procedures for the routine monthly review
of microdata; and the data collection procedures for obtaining information
on the characteristics of individual rental units.
All revised CPI series will be made available at 10:00 a.m. today.
The revised CPI series will be posted on the Internet on the CPI home page
at http://www.bls.gov/cpi/ and also will
be available upon request in hard copy form.
Bureau of Labor Statistics
September 28, 2000
Consumer Price Index Revisions—Summary Tables for All items, All items less food and energy, and Housing
Consumer Price Index Revisions—Tables (by item)
Last Modified Date: October 16, 2001