Friday, September 16, 2016

Airline fares decline in August CPI

Airline fares continued to decline in August on the heels of a significant dip in July, 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 CPIDespite it being just past the peak of the summer travel season, August airline fares decreased 0.1 percent following a 4.9 percent drop in July. The dip ran counter to the overall CPI-U, which was up 0.2 percent for the month on a seasonally adjusted basis from the July figures, according to the BLS's Sept. 16 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 seasonally adjusted increase in the all items index was caused by a rise in the index for all items less food and energy. It increased 0.3 percent in August, as the indexes for shelter and medical care advanced.

The energy and food indexes were both unchanged in August. Major energy component indexes were mixed, with increases in the indexes for natural gas and electricity offsetting declines in the gasoline and fuel oil indexes. The food at home index declined for the fourth month in a row, offsetting an increase in the index for food away from home.

The 0.3-percent increase in the index for all items less food and energy was the largest rise since February 2016. Along with shelter and medical care, the indexes for motor vehicle insurance, apparel, communication, and tobacco all increased. In contrast, the indexes for used cars and trucks, household furnishings and operations, recreation, and airline fares all declined in August.

The all items index rose 1.1 percent for the 12 months ending August, a larger increase than the 0.8- percent rise for the 12 months ending July. The index for all items less food and energy rose 2.3 percent for the 12 months ending August. The food index was unchanged over the last year, while the energy index declined 9.2 percent, the BLS said in its statement.

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