December 2006 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) increased 0.1 percent in December, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The December level of 201.8 (1982-84=100) was 2.5 percent higher than in December 2005.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 0.2 percent in December, prior to seasonal adjustment. The December level of 197.2 (1982-84=100) was 2.4 percent higher than in December 2005.

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) increased 0.1 percent in December on a not seasonally adjusted basis. The December level of 117.1 (December 1999=100) was 2.4 percent higher than in December 2005. Please note that the indexes for the post-2004 period are subject to revision.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U increased 0.5 percent in December, the first advance since August. Energy prices, which had declined in each of the preceding three months, rose 4.6 (cont.)

Effective with the release of the January 2007 CPI, BLS will publish indexes to three decimal places. Percent changes based on these indexes will continue to be published to one decimal place. See page 5 for more details.

percent in December. Within energy, the index for petroleum-based energy increased 7.7 percent and the index for energy services increased 1.2 percent. The food index was unchanged in December. The index for all items less food and energy, which was virtually unchanged in November, increased 0.2 percent in December. Upturns in the indexes for apparel and for tobacco and smoking products werelargely responsible for the acceleration. Shelter costs rose less than in November, but still accounted for about 80 percent of the December advance in the index for all items less food and energy.

Consumer prices advanced at a seasonally adjusted annual rate (SAAR) of 0.2 percent in the fourth quarter of 2006. This followed increases in the first three quarters at annual rates of 4.3, 5.1, and 0.8 percent, respectively. For the 12 month period ended in December, the CPI rose 2.5 percent. This compares with an increase of 3.4 percent in 2005. Energy costs, which rose sharply in both 2004 and 2005, advanced at a 22.8 percent annual rate in the first half of 2006 before declining at a 13.4 percent annual rate in the second half of the year. Overall energy costs rose 2.9 percent in all of 2006 with the index for petroleum based energy advancing 6.1 percent, while the index for energy services declined 0.6 percent. The food index, which rose 2.3 percent in 2005, increased 2.1 percent in 2006. Food at home prices rose 1.4 percent in 2006; the index for dairy products declined 1.2 percent, while the other five major grocery store food groups registered increases of between 0.7 and 3.1 percent.

Excluding food and energy, the CPI-U advanced at a 1.4 percent SAAR in the fourth quarter, following increases at rates of 2.8, 3.6, and 2.7 percent in the first three quarters of 2006. The 2.6 percent advance for all of 2006 compares with increases of 2.2 percent in each of the preceding two years. The index for shelter, which increased 2.6 percent in all of 2005, rose 4.2 percent in 2006 and was largely responsible for the acceleration in the index for all items less food and energy. An upturn in the index for apparel also contributed to this acceleration. 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 was unchanged in December. The index for food at home declined 0.3 percent, reflecting a 1.5 percent decrease in the index for fruits and vegetables. The indexes for fresh vegetables and for fresh fruits declined 3.8 and 0.6 percent, respectively, while the index for processed fruits and vegetables rose 0.8 percent. The indexes for nonalcoholic beverages and for other food at home also contributed to the December decline in grocery store food prices, decreasing 0.3 and 0.2 percent, respectively. Partially offsetting these declines were increases in the indexes for cereal and bakery products, for dairy products, and for meats, poultry, fish, and eggs. The index for cereal and bakery products rose 0.4 percent in December and 3.1 percent in the last 12 months. The index for dairy products rose 0.1 percent in December, but declined 1.2 percent in the last 12 months, reflecting a 4.3 percent drop in fresh whole milk prices. The index for meats, poultry, fish, and eggs advanced 0.1 percent. Increases in the indexes for eggs, for poultry, and for pork- -up 6.9, 0.4, and 0.5 percent, respectively--more than offset price declines for beef, for other meats, and for fish and seafood. During the 12 month period ended in December 2006, prices for beef and pork increased 0.5 and 0.7 percent, respectively, while poultry prices declined 0.7 percent. The other two components of the food and beverages index--food away from home and alcoholic beverages--increased 0.3 and declined 0.2 percent, respectively, in December and rose 3.2 and 2.4 percent in 2006.

The index for housing increased 0.4 percent in December, the same as in November. The index for fuels and utilities increased 1.1 percent in December, following a 1.0 percent rise in November. The index for natural gas rose substantially for the second consecutive month--up 3.9 percent in December--but has declined 14.2 percent over the last 12 months. The index for fuel oil increased 4.3 percent in December and was 2.3 percent higher than a year ago. The index for electricity was unchanged in December, but has increased 7.5 percent during the last 12 months. The index for shelter rose 0.3 percent in December. Within shelter, the indexes for rent and owners' equivalent rent rose 0.5 and 0.3 percent, respectively, and the index for lodging away from home rose 0.4 percent. (Prior to seasonal adjustment, the index for lodging away from home declined 2.3 percent.) During the 12 month period ended in December, the indexes for rent and for owners' equivalent rent each rose 4.3 percent and the index for lodging away from home increased 4.0 percent. The index for household furnishings and operations rose 0.1 percent in December and 0.5 percent during the last 12 months.

The transportation index increased 1.8 percent in December, following three consecutive declines. The index for gasoline, which had declined in each of the preceding three months, rose 8.0 percent in December. For the 12 months ended in December, gasoline prices increased 6.4 percent, declining significantly in the second half of the year after advancing sharply in the first six months of 2006. The index for new vehicles declined for the fifth consecutive month--down 0.2 percent in December. (As of December, about 71 percent of the new vehicle sample consisted of 2007 models. The 2007 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. For a report on quality changes for the 2007 vehicles represented in the Producer Price Index sample, see news release USDL-06-1973, dated November 14, 2006.) New vehicle prices were 0.9 percent lower than in December 2005. The index for used cars and trucks decreased for the fourth consecutive month--down 0.8 percent in December-- and was 2.2 percent lower than in December 2005. The index for public transportation declined 0.2 percent, reflecting a 2.4 percent drop in airline fares. Airline fares fell 1.0 percent in 2006, advancing sharply in the first seven months of the year before declining 12.1 percent in the last five months of the year.

The index for apparel increased 0.6 percent in December. (Prior to seasonal adjustment, apparel prices fell 2.5 percent, largely as a result of pre-holiday discounting.) During the 12 month period ended in December, apparel prices advanced 0.9 percent, their first annual increase since 1997. Prices for women's clothing rose 1.7 percent in 2006, more than offsetting price declines for men's, for boys', and for girls' apparel. A 5.2 percent increase in jewelry prices also contributed to the upturn in the apparel index.

Medical care costs rose 0.1 percent in December. The index for medical care commodities--prescription drugs, nonprescription drugs, and medical supplies--decreased 0.2 percent, reflecting a 0.5 percent decline in prescription drug prices. The index for medical care services rose 0.2 percent in December. The indexes for professional services and for hospital and related services increased 0.3 and 0.1 percent, respectively. (Prior to seasonal adjustment, the index for hospital and related services decreased 0.1 percent.) For the 12 months ended in December 2006, the index for medical care rose 3.6 percent after increasing 4.3 percent in 2005. The index for prescription drugs rose 1.9 percent during the 12 months ended in December, following an increase of 4.4 percent in 2005. Charges for hospital and related services increased 6.1 percent in the 12 month period ended in December 2006, following a 5.1 percent rise in 2005.

The index for recreation declined 0.3 percent in December. Price decreases were recorded for video and audio products and services, for pets, pet products and services, for sporting goods, for photography, and for toys. Partially offsetting these decreases was a 0.7 percent increase in the index for admissions to movies, theaters, concerts, and sporting events. During the 12 months ended in December the index for recreation rose 1.0 percent. Increases in the indexes for admissions, for pets, pet products and services, and for cable and satellite television and radio services--up 5.2, 3.5, and 2.6 percent, respectively--more than offset declines in the indexes for televisions, for toys, and for photography-- down 22.6, 4.8, and 4.8 percent, respectively.

The index for education and communication rose 0.2 percent in December. Educational costs increased 0.5 percent, while communication costs declined 0.2 percent. During the 12 months ended in December, educational costs rose 6.3 percent, largely as a result of a 7.0 percent rise in the index for college tuition and fees. The index for communication declined 1.4 percent during the last 12 months, reflecting declines in prices for personal computers and peripheral equipment, for computer software and accessories, and for internet services and electronic information providers--down 12.0, 7.4, and 18.3 percent, respectively. Partially offsetting these declines was a 1.7 percent increase in the index for telephone services.

The index for other goods and services increased 0.8 percent in December to a level 3.0 percent higher than in December 2005. The index for tobacco and smoking products rose 1.5 percent in December and 2.8 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 increased 0.6 percent in December.

Consumer Price Index data for January are scheduled for release on Wednesday, February 21, 2007, at 8:30 A.M. (EST).

Consumer Price Index Levels to be Published to Three Decimal Places

Effective with the release of the January 2007 Consumer Price Index (CPI), the Bureau of Labor Statistics will display CPI index values to three decimal places in all paper and electronic publications. This change will apply to the All Items Consumer Price Index and all component indexes for the CPI-U, CPI-W, and C-CPI-U, for the U.S. City Average and for all other published areas. In addition, percent changes will be computed based upon the three decimal place indexes rather than the current one decimal place indexes. Percent changes will continue to be rounded to one decimal place.

This change in procedure addresses a rounding issue that has resulted in published percent changes that are 0.1 percentage point higher or lower than the same percent changes based on unrounded index values (i.e., indexes to three or more decimal places). These differences can be particularly important when percent changes are very small. Publishing the index values to three decimal places, and using these values to compute percent changes, will essentially eliminate the rounding differences. This change will only affect the presentation of the index data. The index values will continue to be calculated from underlying price data in the same manner as in the past, and no systematic upward or downward effect on the data will be introduced. The levels of future indexes will be affected only in that they will be published to three decimal places rather than one. Official CPI data previously published will not be revised.

Recalculated Seasonally Adjusted Indexes to be Available on February 16, 2007

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 2002 through December 2006, on Friday, February 16, 2007. This date is two working days before the scheduled release of the January 2007 CPI on Wednesday, February 21, 2007.

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, 2006.

C-CPI-U Index Revisions

As scheduled, effective with release of data for January 2007, the Chained Consumer Price Index for All Urban Consumers (C-CPI-U) will undergo its fifth annual index revision. C-CPI-U indexes for the 12 months of 2005 will be issued in final form and values for the 12 months of 2006 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 2007 and the interim (revised initial) indexes for 2006--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 2005, the biennial 2003-2004 expenditure weights will be replaced with separate monthly expenditure weights.

Facilities for Sensory Impaired

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