CPI for all items falls 0.1% in December as energy and food indexes decline

[mahatmakanejeeves]

Source: U.S. Bureau of Labor Statistics

On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers declined 0.1 percent in December after being unchanged in November. The index for all items less food and energy rose 0.1 percent in December after increasing 0.2 percent in November.

Economic News Release

Consumer Price Index Summary USDL-16-0109

Transmission of material in this release is embargoed until 8:30 a.m. (EST) January 20, 2016

Technical information: [phone] [e-mail] www.bls.gov/cpi
Media Contact: [phone] [e-mail]

CONSUMER PRICE INDEX – DECEMBER 2015

The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.1 percent in December on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 0.7 percent before seasonal adjustment.

The indexes for energy and food both declined for the second month in a row, leading to the decline in the seasonally adjusted all items index. The energy index fell 2.4 percent as all major component energy indexes declined. The food index fell 0.2 percent as the index for food at home decreased 0.5 percent, led by a sharp decline in the index for meats, poultry, fish, and eggs.

The index for all items less food and energy rose 0.1 percent in December, its smallest increase since August. The index for shelter continued to rise, and the indexes for medical care, household furnishings and operations, motor vehicle insurance, education, used cars and trucks, and tobacco also increased in December. However, a number of indexes declined, including those for apparel, airline fares, personal care, new vehicles, and communication.

The all items index rose 0.7 percent over the last 12 months, compared to the 0.5 percent 12 month increase for the period ending November. The food index rose 0.8 percent over the last 12 months, though the index for food at home declined. The energy index fell 12.6 percent, with all its major components decreasing. The index for all items less food and energy increased 2.1 percent over the last 12 months.
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Brief Explanation of the CPI

The Consumer Price Index (CPI) is a measure of the average change in prices over time of goods and services purchased by households. The Bureau of Labor Statistics publishes CPIs for two population groups: (1) the CPI for Urban Wage Earners and Clerical Workers (CPI-W), which covers households of wage earners and clerical workers that comprise approximately 28 percent of the total population and (2) the CPI for All Urban Consumers (CPI-U) and the Chained CPI for All Urban Consumers (C-CPI-U), which covers approximately 89 percent of the total population and includes, in addition to wage earners and clerical worker households, groups such as professional, managerial, and technical workers, the self-employed, short-term workers, the unemployed, and retirees and others not in the labor force.....

For further details visit the CPI home page on the Internet at www.bls.gov/cpi/ or contact our CPI Information and Analysis Section on [phone].

Read more: http://www.bls.gov/news.release/cpi.nr0.htm

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I went over four paragraphs on the news link, because it's a gummint press release. You're paying for it, so I can quote without limit.

U.S. Consumer Prices Fall 0.1% in December

Strong dollar, lower energy prices help keep the lid on inflation

By Anna Louie Sussman
Updated Jan. 20, 2016 10:27 a.m. ET

WASHINGTON—U.S. consumer prices fell in December, a sign that the economy is still absorbing the impacts of a strong dollar and sinking energy costs.

Increases in prices for shelter and medical care decelerated slightly from faster gains in recent months, and weren’t enough to offset declining energy and food costs in December. Layoffs in the energy sector have rippled throughout the economy, cooling off once-hot housing markets in areas dependent on the energy industry.

The consumer-price index, which measures what Americans pay for everything from airfare to baby food, fell a seasonally adjusted 0.1% in December, the Labor Department said Wednesday. Excluding the volatile food and energy categories, so-called core prices rose 0.1%, their smallest increase since August.

Economists surveyed by The Wall Street Journal had expected both overall prices to stay flat, and core prices to rise 0.2%, as they did in November.

Not all CPI's are alike. For an earlier discussion at DU about that, see:

CPI for all items rises 0.2% as gasoline and shelter prices rise; food prices decline

From the zeroeth post:

I added the bolding.

Cryptoad points out the significance of the CPI-W. It is used to calculate Social Security's Cost-of-Living Adjustment (COLA):

Based on the increase in the Consumer Price Index (CPI-W) from the third quarter of 2013 through the third quarter of 2014, Social Security and Supplemental Security Income (SSI) beneficiaries will receive a 1.7 percent COLA for 2015.

Consumer Price Index Frequently Asked Questions (FAQs)

What goods and services does the CPI cover?

The CPI represents all goods and services purchased for consumption by the reference population (U or W) BLS has classified all expenditure items into more than 200 categories, arranged into eight major groups. Major groups and examples of categories in each are as follows:
FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks)
HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)
APPAREL (men's shirts and sweaters, women's dresses, jewelry)
TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance)
MEDICAL CARE (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services)
RECREATION (televisions, toys, pets and pet products, sports equipment, admissions);
EDUCATION AND COMMUNICATION (college tuition, postage, telephone services, computer software and accessories);
OTHER GOODS AND SERVICES (tobacco and smoking products, haircuts and other personal services, funeral expenses).

The CPI-U is used by the Treasury Department to set the interest rates on I Bonds.

I Savings Bonds

How do I Bonds earn interest?

Interest on an I Bond rates is a combination of two rates:
1.A fixed rate of return which remains the same throughout the life of the I Bond

and
2.A variable inflation rate which we calculate twice a year, based on changes in the nonseasonally adjusted Consumer Price Index for all Urban Consumers (CPI-U) for all items, including food and energy (CPI-U for March compared with the CPI-U for September of the same year, and then CPI-U for September compared with the CPI-U for March of the following year).

In specific, there is a discussion of the Cost of Living Index here:

Let's look at that.

The CPI-W is discussed here:

CPI-W methodology

[Bucky]

1. deflation is usually a function of underemployment, but this time I think it's suppressed wage rates

When you choke the middle class, you suppress the consumer market. I suspect that's what's happening now. We'd have a much more robust economy if we could get wages up (even tho that might also trigger moderate inflation rates)

[GummyBearz]

2. You are right

And we need moderate inflation anyway. JFC anyone that buys eggs, chicken, and blue berries at the grocery store for the past 8 years knows there is inflation in the cost of food. Too bad middle class wages haven't inflated as well. Apple would be selling way more iProducts if the middle class wages kept up with food prices...