Wednesday, August 19, 2015

Airline fares down sharply in July CPI

Airline fares, which rose 2.0 percent in June, reversed course and fell sharply in July according to the latest figures on the Consumer Price Index for All Urban Consumers (CPI-U) issued by the Bureau of Labor Statistics (BLS), U.S. Department of Labor.

The index for airline fares fell 5.6 percent in July, its largest decline since December 1995, the BLS said in its Aug. 19 statement detailing the figures. While the decrease means the index has posted declines in seven of the last nine months, it does not offset the nearly eight percent increase the index posted in the combined May and June figures.

The calculations of airline fares include an allowance for checked bag fees but the 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 one 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, the BLS could easily incorporate that price increase.

The seasonally adjusted all items figure was up 0.1 percent from the June figure. Over the last 12 months, the all items index rose 0.2 percent before seasonal adjustment.

The indexes for food, energy, and all items less food and energy all rose slightly in July. The food index rose 0.2 percent as all six major grocery store food group indexes increased. The energy index rose 0.1 percent as an increase in the gasoline index more than offset declines in other energy component indexes, the BLS statement said.

The all items index increased 0.2 percent for the 12 months ending July. The 12-month change has been rising since April. The index for all items less food and energy increased 1.8 percent for the 12 months ending July; this was the fourth time in 5 months the 12-month change was 1.8 percent. The food index increased 1.6 percent over the last 12 months. The energy index, however, continues to show a 12- month decline, falling 14.8 percent over the past year, the BLS said.

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