Wednesday, October 22, 2014

Air fares decline; CPI nearly flat in September

Airline fares declined slightly in September, helping offset higher prices for food, shelter and medical care, and contributing to a nearly flat Consumer Price Index for All Urban Consumers (CPI-U), the Bureau of Labor Statistics (BLS) reported Oct. 22.

Airline fares continued the decline that began during the summer months, dropping 0.5 percent in September. That decrease follows a 4.7 percent decline in August and a 5.9 percent decline in July. The three monthly reductions more than offset the 10.9 percent increase posted between February and June, and resulted in a net decline of 3.0 percent for the index over the last year.

The calculations of airline fares include an allowance for checked bag fees but the BLS does not include other ancillary charges.

"We found a certain percentage of passengers checked bags," a BLS spokesperson told TheTravelPro in an e-mail. "We apply this percentage to all incoming quotes during sample rotation and then assign the appropriate checked bag fee (assuming 1 bag, for either one-way or round-trip, based on the description of the quote). We even apply baggage specs to airlines that do not charge for bags so that if they start to charge in the future, we could easily incorporate that price increase."

Declines in airline fares and a drop of 0.1 percent in the index for used cars and trucks helped offset increases in categories including food and shelter, each up 0.3 percent in September, and medical care, which was up 0.2 percent. The index for alcoholic beverages and for personal care were both up 0.1 percent for the month.

The indexes for commodities less food and energy, new vehicles, and apparel were unchanged in September.

Of the indexes showing increases, the largest was in the utility (piped) gas service, which rose 1.6 percent after declines in May, June, July and August.

Overall, the CPI-U increased 0.1 percent in September after a 0.2 percent decline in August. The index for all items less food and energy also increased 0.1 percent in September after remaining flat in August.Over the last 12 months the all items index rose 1.7 percent before seasonal adjustment.

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