Tuesday, October 18, 2016

Airline fares edge upward in September CPI

Airline fares reversed course in September on the heels of a dip in August and 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 CPISeptember airline fares increased 0.4 percent following a 0.1 percent drop in August and a 4.9 percent drop in July. The increase aligned with the overall CPI-U, which was up 0.3 percent for the month on a seasonally adjusted basis from the August figures, according to the BLS's Oct. 18 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.

Increases in the shelter and gasoline indexes were the main causes of the rise in the all items index. The gasoline index rose 5.8 percent in September and accounted for more than half of the all items increase. The shelter index increased 0.4 percent, its largest increase since May, the BLS said.

The energy index increased 2.9 percent, its largest advance since April. Along with the gasoline index, other energy component indexes also rose. The index for food, in contrast, was unchanged for the third consecutive month, as the food at home index continued to decline.

The index for all items less food and energy increased 0.1 percent in September after rising 0.3 percent in August. The shelter index increased 0.4 percent in September, reflecting a 0.3-percent increase in the rent index and a 0.4-percent advance in the index for owners' equivalent rent. The index for medical care rose, though the 0.2 percent increase in September was the smallest increase since March. The index for prescription drugs increased 0.8 percent, while the hospital services index was unchanged.

The index for motor vehicle insurance continued to rise, increasing 0.4 percent in September. The personal care index increased in September, advancing 0.4 percent. The index for airline fares rose 0.4 percent, following declines in July and August. The index for tobacco also increased 0.4 percent, while the alcoholic beverages index rose 0.3 percent and the education index advanced 0.2 percent.

In contrast to these increases, several indexes declined in September. The index for communication fell 0.8 percent, its largest decline since October 2014, and the apparel index decreased 0.7 percent. The index for used cars and trucks continued to fall, declining 0.3 percent in September. The indexes for new vehicles and for recreation both fell 0.1 percent, while the index for household furnishings and operations was unchanged.

The index for all items less food and energy increased 2.2 percent over the past 12 months. The 12- month increase has stayed in the narrow range of 2.1 percent to 2.3 percent since December 2015. The shelter index has risen 3.4 percent over the last 12 months, and the medical care index has increased 4.9 percent, the BLS said in its statement.

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