The Seasonality of Consumer Prices

In reevaluating the evidence of seasonality in prices, the authors find that seasonal price movements have become more prominent in the relatively stable inflation environment that has prevailed since 1982. They conclude that the amount of seasonality differs greatly by item, making it difficult to generalize about seasonal price movements. That is, seasonality is predominantly idiosyncratic in nature, a result that contrasts with studies demonstrating a common seasonal cycle in real economic variables. Given the statistical criteria used by the Bureau of Labor Statistics to selectively seasonally adjust component data, the likelihood of noise appearing in the aggregate Consumer Price Index at a seasonal frequency is increased. For economists interested in a high-frequency inflation statistic, this argues in favor of seasonally adjusting the index after aggregation.