Airline fares rise in June CPI

Airline fares increased 1.6 percent increase in June, more than offsetting the 1.5 percent decline in May according to the latest Consumer Price Index for All Urban Consumers (CPI-U) issued by the Bureau of Labor Statistics (BLS), U.S. Department of Labor.

Bureau of Labor Statistics logo, consumer price index CPIFrom June 2015 through June 2016, the airline fare index posted a net decline of 4.7 percent while the all items index has shown a net increase of 1.0 percent on an unadjusted basis, according to the BLS's July 15 news release that contained the statistics.

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.

The overall CPI-U increased 0.2 percent in June on a seasonally adjusted basis, the same overall increase as the month before, the BLS reported.

The food index declined 0.1 percent in June after a 0.2-percent decrease in May, but the indexes for energy and all items less food and energy rose, resulting in the seasonally adjusted all items increase. The index for food at home fell 0.3 percent in June following a 0.5-percent decline in May. Four of the six major grocery store food group indexes declined. The energy index rose 1.3 percent, its fourth increase in a row, although major energy component indexes were mixed. The gasoline and fuel oil indexes each rose 3.3 percent in just but the indexes for electricity and natural gas each declined after rising in April and May.

Overall, the energy index has declined 9.4 percent over the past year, with all of its major components falling over the period. Gasoline has decreased 15.4 percent while the indexes for natural gas and electricity have posted smaller declines, falling 5.0 percent and 1.8 percent, respectively.

The index for all items less food and energy increased 0.2 percent in June, the same increase as in May, with the 1.6 percent increase in the airline fare index the largest within the category. Medical care commodities rose 1.1 percent, tobacco and smoking products rose 0.6 percent, rent of a primary residence going up 0.4 percent. The largest decline was in the index for used cars and trucks, which dropped 1.1 percent.

The all items index rose 1.0 percent for the 12 months ending June. This is the same increase as for the 12 months ending May, but smaller than the 1.7 percent average annual increase over the past 10 years. The index for all items less food and energy rose 2.3 percent for the 12 months ending June, a larger increase than the 2.2 percent rise for the 12 months ending May, and above the average annual rate of 1.9 percent over the past 10 years, the BLS said in its statement.

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