Thursday, April 14, 2016

Airline fares drop in March CPI

Airline fares, which edged up 0.1 percent in February and 1.2 percent in January, reversed course in March and dropped 0.9 percent 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.

Although the March dip in fares did not completed erase the increases of the year's first two months, the index remains one of five that have all shown net declines over the past 12 months, according to the BLS. The others are used cars and trucks, apparel, communication, and household furnishings and operations.

The calculations of airline fares include an allowance for checked bag fees but the BLS does not include other ancillary charges which continue to rise and represent a larger percentage of airlines' overall revenue.

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.

Airline fares countered the seasonally adjusted all items figure, which rose 0.1 percent in March after remaining a slight decline in February. Over the last 12 months, the all items index rose 0.9 before seasonal adjustment, the BLS said in its April 14 news release containing the data.

The index for all items less food and energy increased 0.1 percent in March after rising 0.3 percent in February. The shelter index rose 0.2 percent after rising 0.3 percent in both January and February. The index for rent rose 0.3 percent and the index for owners' equivalent rent increased 0.2 percent. The index for lodging away from home turned down in March, falling 1.8 percent after rising in 5 of the 6 previous months. The medical care index rose slightly in March, increasing 0.1 percent after rising 0.5 percent in both January and February.

The indexes for prescription drugs and physicians' services both rose, but the hospital services index declined. The recreation index rose 0.2 percent in March, and the tobacco index rose 0.5 percent. The indexes for education and personal care both rose slightly, increasing 0.1 percent. The indexes for new vehicles and for alcoholic beverages were unchanged in March, while a number of indexes declined. The apparel index, which rose 1.6 percent in February, fell 1.1 percent in March. The index for airline fares fell 0.9 percent, and the indexes for used cars and trucks, for communication, and for household furnishings and operations all declined 0.1 percent.

The index for all items less food and energy increased 2.2 percent over the past 12 months, a slightly smaller figure than the 2.3 percent change for the 12 months ending February. The shelter index has risen 3.2 percent over the last year, and the index for medical care has risen 3.3 percent. The indexes for airline fares, used cars and trucks, apparel, communication, and household furnishings and operations have all declined over the past 12 months, the BLS said in its statement.

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