December 2005 Consumer Price Index

Historical release narrative reproduced from the official public-domain source. Statistical tables, standard technical appendices, administrative material and attendance rosters are omitted; formatting is adapted for reading. Figures retain the release's historical context and may have been revised. Consult the linked source for the complete document.

The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.4 percent in December, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The December level of 196.8 (1982-84=100) was 3.4 percent higher than in December 2004.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) decreased 0.5 percent in December, prior to seasonal adjustment. The December level of 192.5 was 3.5 percent higher than in December 2004.

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) decreased 0.3 percent in December on a not seasonally adjusted basis. The December level of 114.0 (December 1999=100) was 2.8 percent higher than in December 2004. Please note that the indexes for the post-2003 period are subject to revision.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U decreased for the second consecutive month--down 0.1 percent in December--again reflecting a large decline in energy prices. The index for energy declined 2.2 percent in December, its third consecutive monthly decrease. Within energy, the index for petroleum-based energy declined 2.7 percent and the index for energy services fell 1.7 percent. The index for food rose 0.2 percent in December, following increases of 0.3 percent in each of the preceding three months. The index for all items less food and energy rose 0.2 percent in December, the same as in each of the preceding two months, after registering increases of 0.1 percent in each of the prior five months. Shelter costs rose 0.3 percent in December and accounted for about 70 percent of the advance in the index for all items less food and energy.

Consumer prices declined at a seasonally adjusted annual rate (SAAR) of 1.6 percent in the fourth quarter of 2005. This followed increases in the first three quarters at annual rates of 4.3, 1.9, and 9.4 percent, respectively. For the 12 month period ended in December, the CPI rose 3.4 percent. This compares with an increase of 3.3 percent in 2004. In 2005, the index for energy rose 17.1 percent, following a 16.6 percent increase in 2004, and accounted for about 40 percent of the overall advance in the CPI-U. While the increases in the overall energy indexes for 2004 and 2005 were similar, the composition was different. Petroleum based energy accounted for nearly 80 percent of the 2004 increase, but just over half of the 2005 increase in the energy component. The food index, which rose 2.7 percent in 2004, increased 2.3 percent in 2005. The index for food at home rose 1.7 percent in 2005, following a 2.4 percent increase in 2004. Smaller increases in the indexes for fruits and vegetables and for dairy products were largely responsible for the moderation.

Excluding food and energy, the CPI-U advanced at a 2.8 percent SAAR in the fourth quarter, following increases at rates of 3.3, 1.2, and 1.4 percent in the first three quarters of 2005. The 2.2 percent advance for all of 2005 was the same as in 2004. Even within the index for all items less food and energy, price movements of the major groups were similar in the two years. The larger increase in the housing group and the smaller advance in the transportation component in 2005 were largely attributable to the relative movements of the energy components within the groups during the two years. Household fuels rose 18.0 percent in 2005 after advancing 8.4 percent in 2004, while motor fuels rose 16.2 percent after increasing 26.1 percent in 2004. The annual rates for selected groups for the last eight years are shown below.

Percentage change 12 months ended in December

The food and beverages index rose 0.1 percent in December. The index for food at home also advanced 0.1 percent after registering increases of 0.3 percent in each of the preceding three months. The index for fruits and vegetables increased 0.9 percent in December. Increases in the indexes for fresh vegetables and for processed fruits and vegetables--up 2.8 and 1.7 percent, respectively--more than offset a 1.4 percent decrease in the index for fresh fruits. (Prior to seasonal adjustment, fresh fruit prices rose 0.5 percent.) The index for other food at home increased 0.3 percent, reflecting a 1.0 percent increase in the sugar and sweets component. Partially offsetting these increases were declines in the indexes for cereal and bakery products, for dairy products, and for nonalcoholic beverages--down 0.2, 0.3, and 0.5 percent, respectively. The index for meats, poultry, fish and eggs was unchanged in December. A 1.2 percent increase in beef prices was offset by declines in prices for poultry, for pork, and for other meats. During the 12 month period ended in December 2005, prices for beef and poultry increased 2.2 and 0.3 percent, respectively, while pork prices declined 0.1 percent. In 2005 each of the six major grocery store food groups registered an increase in prices, with the index for nonalcoholic beverages the largest at 3.5 percent and the index for fruits and vegetables the smallest at 0.6 percent. The other two components of the food and beverages index--food away from home and alcoholic beverages--increased 0.2 and declined 0.4 percent, respectively, in December and rose 3.2 and 1.3 percent in 2005.

The index for housing increased 0.1 percent in December. Increases in the indexes for shelter and for household furnishings and operations-- up 0.3 and 0.5 percent, respectively--more than offset a 1.4 percent drop in the index for fuels and utilities. The index for fuel oil declined for the third consecutive month--down 2.5 percent in December--but advanced 27.2 percent during the last 12 months. In December, the indexes for natural gas and for electricity declined 3.5 and 0.6 percent, respectively. During the 12 month period ended in December, however, charges for natural gas and for electricity rose 30.2 and 10.7 percent. Within shelter, the indexes for owners' equivalent rent and for rent rose 0.3 and 0.1 percent, respectively, and the index for lodging away from home rose 0.9 percent. (Prior to seasonal adjustment, the index for lodging away from home declined 1.9 percent.) During the 12 month period ended in December, the indexes for lodging away from home, for rent, and for owners' equivalent rent, rose 3.5, 3.1, and 2.5 percent, respectively. The index for household furnishings and operations rose 0.7 percent during the last 12 months, following an increase of 0.6 percent in all of 2004.

The index for apparel declined 0.3 percent in December. (Prior to seasonal adjustment, apparel prices fell 3.3 percent, largely as a result of pre-holiday discounting.) During the 12 month period ended in December, apparel prices declined 1.1 percent, their eighth consecutive annual decline. Prices for men's, for boys', and for girls' apparel each were lower than 12 months earlier, but prices for women's clothing rose slightly in 2005.

The transportation index decreased 0.8 percent in December, largely reflecting a 2.6 percent drop in the index for gasoline. Gasoline prices declined for the third consecutive month--down 6.2 percent in December --and have fallen 25.1 percent from their peak level reached in September. As of December, however, gasoline prices were 16.1 percent higher than their level a year ago. The index for new vehicles decreased for the second consecutive month--down 0.1 percent in December. (As of December, about 70 percent of the new vehicle sample was represented by 2006 models. The 2006 models will continue to be phased in, with appropriate adjustments for quality change, over the next several months as they replace old models at dealerships.) New vehicle prices were 0.4 percent lower than in December 2004. The index for used cars and trucks also decreased 0.1 percent in December, but this index has risen 1.4 percent in the last 12 months. The index for public transportation declined 0.9 percent in December, reflecting a 2.9 percent drop in airline fares. Despite registering declines in four of the last five months, airline fares increased 6.4 percent in 2005, their first annual advance since a 5.9 percent increase in 2000.

Medical care costs rose 0.1 percent in December. The index for medical care commodities--prescription drugs, nonprescription drugs, and medical supplies--increased 0.2 percent. The index for medical care services rose 0.1 percent in December. The index for professional services rose 0.1 percent while the index for hospital and related services decreased 0.1 percent. (Prior to seasonal adjustment, the index for hospital and related services increased less than 0.1 percent.) In the 12 months ended in December 2005, the index for medical care rose 4.3 percent after increasing 4.2 percent in 2004. The index for prescription drugs rose 4.4 percent during the 12 months ended in December, following increases of 3.5 percent in 2004 and 2.5 percent in 2003. Charges for hospital and related services increased 5.1 percent in the 12 month period ended in December 2005, following a 5.2 percent rise in 2004.

The index for recreation was unchanged in December. Price increases for cable and satellite television and radio service, for pets, pet products and services, and for admissions to movies, theaters, concerts, and sporting events were largely offset by decreases in the indexes for toys, for sporting goods, for photography, and for recreational books. During the 12 months ended in December, the indexes for cable and satellite services and for admissions increased 3.3 and 3.5 percent, respectively, accounting for over 95 percent of the advance in the recreation index in 2005.

The index for education and communication rose 0.3 percent in December. Educational costs increased 0.5 percent, while communication costs declined 0.1 percent. During the 12 months ended in December, educational costs rose 6.1 percent, largely as a result of a 6.6 percent rise in the index for college tuition and fees. The index for communication declined 1.3 percent during the last 12 months, reflecting declines in prices for land-line long distance telephone services, for wireless telephone services, and for personal computers and peripheral equipment--down 1.7, 1.5, and 15.8 percent, respectively. Partially offsetting these declines was a 3.3 percent increase in land-line local telephone service charges.

The index for other goods and services increased 0.5 percent in December to a level 3.1 percent higher than in December 2004. The index for tobacco and smoking products rose 0.4 percent in December and 5.8 percent during the last 12 months.

CPI for Urban Wage Earners and Clerical Workers (CPI-W)

On a seasonally adjusted basis, the CPI for Urban Wage Earners and Clerical Workers decreased 0.1 percent in December.

Consumer Price Index data for January are scheduled for release on Wednesday, February 22, 2006, at 8:30 A.M. (EST).

Recalculated Seasonally Adjusted Indexes to be Available on February 17, 2006

Each year with the release of the January CPI, seasonal adjustment factors are recalculated to reflect price movements from the just-completed calendar year. This routine annual recalculation may result in revisions to seasonally adjusted indexes for the previous 5 years. BLS will make available recalculated seasonally adjusted indexes, as well as recalculated seasonal adjustment factors, for the period January 2001 through December 2005, on Friday, February 17, 2006. This date is two working days before the scheduled release of the January 2006 CPI on Wednesday, February 22, 2006.

The revised indexes and seasonal factors will be available on the internet. The address is http://www.bls.gov/cpi. Look under Tables Created by BLS and select Revised Seasonally Adjusted Data, 2005.

Planned Changes in the Consumer Price Index in 2006

Expenditure Weight Update Effective with release of data for January 2006, the Bureau of Labor Statistics (BLS) will update the consumption expenditure weights in the Consumer Price Index for All Urban Consumers (CPI-U) and Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to the 2003-04 period. The updated expenditure weights for these indexes will replace the 2001-2002 weights that were introduced effective with the January 2004 CPI release. As originally announced by BLS in December 1998, CPI expenditure weights will continue to be updated at two-year intervals subsequent to the 2006 updating. For the first six months of 2006, BLS will continue to calculate and publish selected CPI-U and CPI-W "overlap" indexes using the 2001-2002 expenditure pattern that was introduced into the CPI in 2004. These indexes will be compiled on a not seasonally adjusted basis. Comparison of these index series to the corresponding updated series will enable users of the CPI to observe the effects of the expenditure weight change. The subsequent expenditure updates scheduled in 2008 and every two years thereafter also will be accompanied by the publication of overlap indexes for a six-month period using the previous expenditure pattern.

C-CPI-U Index Revisions As scheduled, effective with release of data for January 2006, the Chained Consumer Price Index for All Urban Consumers (C-CPI-U) will undergo its fourth annual index revision. C-CPI-U indexes for the 12 months of 2004 will be issued in final form and values for the 12 months of 2005 will be revised and issued as interim. Calculation of the preliminary versions of the C-CPI-U--the initial version for January and the subsequent months of 2006 and the interim (revised initial) indexes for 2005--will employ the 2003-04 expenditure weights also used in the CPI- U and CPI-W. Note that the final values of the C-CPI-U employ monthly expenditure weights corresponding to the price collection period in their calculation. Thus, in calculation of the final (revised interim) C-CPI-U values for the months of 2004, the biennial 2001-2002 expenditure weights will be replaced with separate monthly expenditure weights.

Facilities for Sensory Impaired

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