Estimation and Comparison of Seasonally Adjusted CPI-U Standard Errors with Official CPI-U Standard Errors

• Activity Number: 471
• Type: Contributed
• Date/Time: Wednesday, August 4, 2010 : 8:30 AM to 10:20 AM
• Sponsor: Section on Government Statistics
• Author(s): Owen Shoemaker*+
• Companies: Bureau of Labor Statistics
• Keywords: Stratified Random Groups ; Seasonality Factors

Abstract

Each month, the BLS produces a set of standard errors for every Area-Item price change in the CPI-U (Consumer Price Index - Urban). These price changes are unadjusted for seasonality. Most of the official CPI-U results released each month to the public are, however, seasonally adjusted. Seasonal factors are updated on a yearly basis, so no permanent set of standard errors based directly on the seasonally adjusted indexes can be maintained. It has been assumed that the standard errors produced for the unadjusted price changes would be comparable if not statistically indistinguishable from the standard errors that would be produced using seasonally adjusted indexes. This paper will produce seasonally adjusted CPI-U standard errors and compare them to their regular (unadjusted) CPI-U standard errors, and will show that this assumption is correct, even down to the lowest aggregate levels.