Not Seasonally Adjusted CPI Measures - Seasonality On Price Information
In its Consumer Price Index (CPI) report for September 2022, the U.S. Bureau of Labor Statistics (mentioned something about not seasonally adjusted CPI measures.
Based on the said report, over the previous year, the Consumer Price Index for All Urban Consumers (CPI-U) went up by 8.2 percent. Then, ahead of the seasonal adjustment, its index level increased in September 2022 by 0.2 percent.
In comparison, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) grew to 8.5 percent over the previous year. As for its index level for the month of September 2022, it increased to 0.1 percent ahead of the seasonal adjustment.
As for the Chained Consumer Price Index for All Urban Consumers (C-CPI-U), over the previous year, there was an 8 percent increase. For September 2022, a 0.3 percent increase happened in the index level “on a not seasonally adjusted basis,” according to the BLS report.
Read further to know more about not seasonally adjusted CPI measures.
COPYRIGHT_WI: Published on https://washingtonindependent.com/not-seasonally-adjusted-cpi-measures/ by William Willis on 2022-11-07T12:00:58.831Z
September Consumer Price Index Report Shows Inflation Rate Hit 8.2%
To understand not seasonally adjusted CPI measures, it would help to know what seasonally adjusted CPI is.
In a given year, several changes and events - or seasonal influences - happen and they even take place frequently. When they do, they affect the economy.
The U.S. Bureau of Labor Statistics (BLS) states on its website:
Seasonal adjustment removes the effects of recurring seasonal influences from many economic series, including consumer prices.- U.S. Bureau of Labor Statistics
According to BLS, seasonal tendencies are quantified during the adjustment phase, and they are then removed from the series to allow for the investigation of non-seasonal price changes.
The following factors affect the differences in prices during a given season:
- climatic conditions
- model changeovers
- production cycles
To give the readers an idea: in the U.S., people can buy oranges any time of the year.
However, consumers will notice that when summer comes, the prices of oranges dramatically increase. That is because the bulk of oranges are picked and sold between the harvest seasons.
Some might be wondering whether the use of not seasonally adjusted CPI measures could be a better option than seasonally adjusted ones, or vice versa.
Going back to the quoted statement from the BLS, it appears that seasonally adjusted data gets favored more.
For one, seasonally adjusted data can prevent prices from rising. They protect consumers from the seasonal changes that can burden their pockets.
The U.S. Bureau of Labor Statistics talked about the not seasonally adjusted CPI measures when it presented how index levels increased in September 2022.
Per the glossary of statistical terms of the Organization for Economic Cooperation and Development (OECD), “not seasonally adjusted” means:
This term is used to describe data series not subject to the seasonal adjustment process.- Organization for Economic Cooperation and Development (OECD)
Another way of saying it is that in a not seasonally adjusted CPI, the impacts caused by the seasonal changes were not taken away from the data series.
When publishing data on the Consumer Price Index (CPI) on a national scale, according to Investopedia, the CPI is “always” seasonally adjusted. Those that examine trends in price change usually choose to analyze seasonally adjusted data.
Yes, it does. Per Investopedia, seasonal differences can obscure how people can assess or understand recurring data and constant trends. Through seasonal adjustments, however, there will be a “clearer view” of these things.
The U.S. Bureau of Labor Statistics said on its website that the CPI is calculated every month (the whole month); so, CPI is adjusted on a monthly basis.
According to Statistics Canada, having not seasonally adjusted CPI measures and seasonally adjusted ones will provide the right estimates.
Choosing between the two simply depends on the kind of analyses people would like to do. It also depends on the context and on the kind of data that people wanted to obtain.
If there are those who like seasonally adjusted data more, there are also those who will go for not seasonally adjusted CPI measures.