Seasonal Adjustment in the CPI
Each year, with the release of the January CPI, seasonal adjustment
factors are recalculated to reflect price movements from the
just-completed calendar year. This routine recalculation may result in
revisions to seasonally adjusted indexes for the previous five years.
Basic information on the use of seasonal adjustment may be found in our
Fact Sheet on Seasonal
For a more technical discussion of seasonal adjustment methodology, see
the following excerpts from the BLS Handbook of Methods:
See also the Timeline of Seasonal Adjustment Methodological Changes
2016 Seasonal Factors and Seasonally Adjusted Data Revisions for January 2016, issued February 2016
A Note on the 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 January,
and the new factors are used to revise the previous five years of seasonally adjusted data. For more information on data revisions and
exceptions to the usual revision schedule, please see the Fact Sheet on Seasonal Adjustment (http://www.bls.gov/cpi/cpisaqanda.htm) and
the Timeline of Seasonal Adjustment Methodological Changes (http://www.bls.gov/cpi/cpiseastimeline.htm).
How to Use Seasonally Adjusted and Unadjusted Data
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 changing climatic conditions, 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.
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
2016 Series Adjusted Using Intervention Analysis Seasonal Adjustment
For the seasonal factors introduced in January 2016, BLS adjusted 37 series using Intervention Analysis Seasonal Adjustment, including selected food and beverage items,
motor fuels, electricity and vehicles. For example, this procedure was used for the Motor fuel series to offset the effects of events such as the response in crude oil
markets to the worldwide economic downturn in 2008. For a complete list of series that used Intervention Analysis Seasonal Adjustment, see Intervention Analysis in Seasonal Adjustment (http://www.bls.gov/cpi/cpisaia16.pdf).
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 five 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 five years of data. Seasonally adjusted indexes beyond the
last five years of data are considered to be final and not subject to revision. In January 2016, revised seasonal factors and seasonally adjusted indexes for 2011-2015
were calculated and published. For directly adjusted series, the seasonal factors for 2015 will be applied to data for 2016 to produce the seasonally adjusted 2016 indexes.
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 five years, but the seasonally adjusted indexes before that period will not be changed. 28 of the 81 components of the U.S. city average
all items index are not seasonally adjusted for 2016.
For additional information on seasonal adjustment in the CPI, please
contact us at (202) 691-6968 or firstname.lastname@example.org.
If you have general questions about the CPI, please contact our information staff at
(202) 691-7000 or email@example.com.
Last Modified Date: November 14, 2016