The Seasonality of Consumer Prices

24 Pages Posted: 25 May 2006 Last revised: 1 Sep 2010

See all articles by Michael F. Bryan

Michael F. Bryan

Federal Reserve Bank of Cleveland; Federal Reserve Banks - Federal Reserve Bank of Atlanta

Stephen G. Cecchetti

Brandeis International Business School; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Date Written: July 1995

Abstract

In this paper, we reevaluate the evidence of seasonality in prices which we find to be substantially greater than previous research has indicated. That is, seasonal price movements have become more prominent in the relatively stable inflation environment that has prevailed since 1982. One main conclusion is drawn from this analysis: The amount of seasonality in prices differs greatly by item, making it difficult to generalize about seasonal price movements. A casual reading fails to reveal an easily identifiable origin of the seasonal variation of prices. That is, seasonality in consumer prices is predominantly idiosyncratic in nature, a result that contrasts with studies demonstrating a common seasonal cycle in real economic variables. This finding has an important practical implication: Given the selective, disaggregated approach taken by the Bureau of Labor Statistics to adjust data seasonally, the existence of idiosyncratic seasonality increases the likelihood of allowing noise in the aggregate CPI at a seasonal frequency. This argues in favor of seasonally adjusting the index after aggregation.

Suggested Citation

Bryan, Michael F. and Cecchetti, Stephen G., The Seasonality of Consumer Prices (July 1995). NBER Working Paper No. w5173. Available at SSRN: https://ssrn.com/abstract=225236

Michael F. Bryan

Federal Reserve Bank of Cleveland ( email )

PO Box 6387
Cleveland, OH 44101
United States

Federal Reserve Banks - Federal Reserve Bank of Atlanta

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States

Stephen G. Cecchetti (Contact Author)

Brandeis International Business School ( email )

415 South Street
Waltham, MA 02453
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States
212-720-8629 (Phone)
212-720-2630 (Fax)

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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