Airline fares continue to slide in December CPI

Airline fares slid 1.9 percent in December following a 0.9 percent dip in November according to the monthly Consumer Price Index for All Urban Consumers (CPI-U) issued by the Bureau of Labor Statistics (BLS), U.S. Department of Labor.

The drop in airline fares ran counter the overall CPI-U, which rose 0.2 percent in December on a seasonally adjusted basis after rising 0.3 percent in November and 0.4 percent in October. Over the last 12 months, the all items index increased 2.3 percent before seasonal adjustment.


Frequent flyers know that airline fare index as reflected in the CPI don't tell the whole story.

Airlines continue to focus on increasing ancillary revenue, which carries an important caveat. While the BLS's calculations of airline fares include an allowance for checked bag fees, the BLS does not include other ancillary charges which represent an ever-larger percentage of airlines' overall revenue.

In September 2018, American Airlines (NASDAQ:AAL), United (NYSE:UAL), Delta Air Lines (NYSE:DAL) and jetBlue (NASDAQ:JBLU) raised fees for checked bags from $25 to $30 for the first bag, and from $35 to $40 for the second. In addition, jetBlue and Alaska (NYSE:ALK) also raised date-change fees. These and other factors are not tracked in the airline fare index.

The indexes for gasoline, shelter, and medical care all rose in December, accounting for most of the increase in the seasonally adjusted all items index. The gasoline index increased 2.8 percent in December. Other major energy component indexes were mixed, and the energy index rose 1.4 percent. The food index rose 0.2 percent in December with the indexes for both food at home and food away from home increasing over the month.

The index for all items less food and energy rose 0.1 percent in December after increasing 0.2 percent in November. Along with the indexes for shelter and medical care, the indexes for apparel, motor vehicle insurance, recreation, and new vehicles all increased in December. In addition to airline fares, the indexes for used cars and trucks, and household furnishings and operations were among those to decline.

The all items index increased 2.3 percent for the 12 months ending December, the largest 12-month increase since the period ending October 2018. The index for all items less food and energy also rose 2.3 percent over the last 12 months, the same increase as the periods ending October and November. The food index rose 1.8 percent over the last 12 months, while the energy index increased 3.4 percent, the BLS said in its January 14 statement.

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