Tuesday, March 24, 2015

Airline fares up slightly in February CPI

Airline fares reversed a two-month decline in February and rose 0.2 percent during the second month of 2015, according to the latest figures on the Consumer Price Index for All Urban Consumers (CPI-U) issued by the Bureau of Labor Statistics, U.S. Department of Labor.

February's increase nibbled away at the 5 percent decline in fares that comprise a 4.7 percent net decline in 2014 and another 0.3 drop in January's airline fare index. The index's overall decline is in contrast to some other indexes that have risen over the past 12 months. Those include shelter, medical care, and new vehicles.

The February increase, combined with increases in other indexes, resulted in a seasonally adjusted CPI-U that was up 0.2 percent from the January figure. Overall, the BLS considers the CPI-U  "virtually unchanged over the last 12 months," it said in its March 24 statement detailing the figures.

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

The agency found a certain percentage of passengers checked bags. It applies that percentage to all  incoming quotes during sample rotation and then assigns the appropriate checked bag fee (assuming 1 bag, for either one-way or round-trip, based on the description of the quote). It also applies baggage specs to airlines that do not charge for bags so that if they start to charge in the future, BLS could easily incorporate that price increase.

February’s CPI-U figures, which were nearly unchanged in many cases, were dramatically different when compared to January, which saw a 9.7 percent decline in the energy index including an 18.7 percent plummet in the gasoline index in January, the sharpest in a series of seven consecutive declines.

On a seasonally adjusted basis, the index for all items less food and energy rose 0.2 percent in February, the same amount the index rose in January. Food overall rose 0.2 percent, which included a 1.0 percent drop in dairy and related items. The energy index rose 1.0 percent overall and included a 2.4 percent increase in the cost of gasoline, beginning the reversal of the 35.4 percent drop in the gasoline index during 2014.

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