Airline fares rise in Jan. CPI

Airline fares reversed course from December and rose 1.2 percent in January 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 ended 2015 with a net decline of 3.0 percent, meaning the January increase erased more than a third of last year's drop. The decline in the index for airline fares was in contrast to a 0.7 percent increase in the all-items figure for 2015, the BLS said in its Feb. 19 statement detailing the figures.

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 all items figure was unchanged in January. Over the last 12 months, the all items index rose 1.4 percent before seasonal adjustment.

The index for all items less food and energy increased 0.3 percent in January. The index for shelter rose 0.3 percent in January while the index for lodging away from home reversed course from its December drop and rose 2.0 percent in January. The indexes for medical care, prescription drugs and hospital services increased 0.5 percent, 0.5 percent and 0.4 percent, respectively. household furnishings and operations, motor vehicle insurance, education, used cars and trucks, and tobacco also increased in December. However, a number of indexes including airline fares declined, including those for apparel, personal care, new vehicles, and communication the BLS statement said.

The index for all items less food and energy increased 2.2 percent over the past 12 months. This is its highest 12-month change since the period ending June 2012, and exceeds the 1.9 percent average annualized increase over the last 10 years. The index for shelter has risen 3.2 percent over the span, and the medical care index has increased 3.0 percent. In contrast, the indexes for apparel and for airline fares have declined over the past 12 months, the BLS said in its statement.

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