Mitigating the Effects of the COVID-19 Pandemic on Seasonally Adjusted Price Indexes

• Activity Number: 445 - GOVT CSpeed 2
• Type: Contributed
• Date/Time: Thursday, August 12, 2021 : 4:00 PM to 5:50 PM
• Sponsor: Government Statistics Section
• Author(s): Jonathan Weinhagen* and Steven Muri and Marie Rogers and Jeffrey Wilson and Blake Hoarty and Daniel Pollotta
• Companies: Bureau of Labor Statistics and Bureau of Labor Statistics and Bureau of Labor Statistics and Bureau of Labor Statistics and Bureau of Labor Statistics and Bureau of Labor Statistics
• Keywords: Consumer Price Indexes; Producer Price Indexes; Seasonal Adjustment

Abstract

The Bureau of Labor Statistics publishes seasonally adjusted Consumer Price Index (CPI) and Producer Price Index (PPI) data on a monthly basis. Seasonal adjustment removes within-year seasonal patterns from data. To seasonally adjust, the CPI and PPI use a filter-based approach that employs moving averages of historical data to estimate seasonal patterns of time series. In 2020, a number of PPIs and CPIs experienced extreme movements as a result of the COVID-19 pandemic. For example, the PPI and CPI for gasoline decreased 53 and 20.6 percent in April 2020, respectively. Because the PPI and CPI use historical data to estimate seasonal patterns, the extreme price movements in 2020 could have adversely affected the two price programs’ ability to accurately estimate seasonally adjusted data. This paper explains steps the CPI and PPI took to mitigate the effects of the COVID-19 pandemic on their seasonally adjusted price indexes. These steps included: identifying price indexes whose movements were affected by the pandemic, estimating time series models to quantify these effects, and finally, removing pandemic related price movements from the data prior to estimating seasonal patterns.