The Consumer Price Index for All Urban Consumers (CPI-U) in the Chicago-Gary-Kenosha area decreased 0.5 percent in December, the U.S. Bureau of Labor Statistics reported today. Regional Commissioner Charlene Peiffer noted that food prices declined 0.2 percent and energy prices fell 2.8 percent. The all items less food and energy category was down 0.2 percent over the month. Among the indexes within the all items less food and energy category, decreasing prices for apparel contributed to the overall decline. (Data in this report are not seasonally adjusted. Accordingly, month-to-month changes may reflect the impact of seasonal influences.)

Over the last 12 months, the Chicago area all items CPI-U increased 2.1 percent. The energy index rose 6.0 percent since last December, primarily due to increases in gasoline prices. The all items less food and energy index was 1.4 percent higher over the year.

Food

Food prices were down 0.2 percent in December after a 0.1-percent decrease in November. Of the two components within the food index, food at home prices were 0.6 percent lower and costs for food away from home were up 0.3 percent over the month. Within the food at home group, prices were lower for frozen and freeze dried prepared foods and milk. In contrast, prices were higher for citrus fruits, breakfast cereal, and carbonated drinks.

From December 2010 to December 2011, the food index increased 3.3 percent. In the previous 12-month period ended December 2010, food prices in the Chicago area were up 1.2 percent.

Energy

The energy index fell 2.8 percent in December after decreasing 0.8 percent in November. Within the energy category, prices were lower for gasoline (-4.1 percent) and electricity (-2.2 percent) while utility (piped) gas service prices were 0.4 percent higher over the month.

Prices for gasoline and electricity rose 9.5 percent and 2.5 percent, respectively, over the year. Utility (piped) gas service costs decreased 1.3 percent. Overall energy prices increased 6.0 percent for the 12 months ended in December 2011.

All items less food and energy

The index for all items less food and energy was down 0.2 percent in December. Among the index’s components, rising prices for household furnishings and operations (1.6 percent) were more than offset by seasonal decreases in apparel prices (-4.9 percent).

Over the year, the index for all items less food and energy increased 1.4 percent. Shelter was the largest contributor, rising 2.3 percent from December 2010 to December 2011. In contrast, recreation costs declined 5.5 percent.

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The January 2012 Consumer Price Index for Chicago is scheduled to be released on February 17, 2012, at 7:30 a.m. (CT).

Technical Note

The Consumer Price Index (CPI) is a measure of the average change in prices over time in a fixed market basket of goods and services. The Bureau of Labor Statistics publishes CPIs for two population groups: (1) a CPI for All Urban Consumers (CPI-U) which covers approximately 87 percent of the total population and (2) a CPI for Urban Wage Earners and Clerical Workers (CPI-W) which covers 32percent of the total population. The CPI-U includes, in addition to wage earners and clerical workers, 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.

The CPI is based on prices of food, clothing, shelter, and fuels, transportation fares, charges for doctors' and dentists' services, drugs, and the other goods and services that people buy for day-to-day living. Each month, prices are collected in 87 urban areas across the country from about 4,000 housing units and approximately 25,000 retail establishments--department stores, supermarkets, hospitals, filling stations, and other types of stores and service establishments. All taxes directly associated with the purchase and use of items are included in the index.

The index measures price changes from a designated reference date (1982-84) that equals 100.0. An increase of 16.5 percent, for example, is shown as 116.5. This change can also be expressed in dollars as follows: the price of a base period "market basket" of goods and services in the CPI has risen from $10 in 1982-84 to $11.65. For further details see the CPI home page on the Internet at www.bls.gov/cpi and the BLS Handbook of Methods, Chapter 17, The Consumer Price Index, available on the Internet at www.bls.gov/opub/hom/homch17_a.htm.

In calculating the index, price changes for the various items in each location are averaged together with weights that represent their importance in the spending of the appropriate population group. Local data are then combined to obtain a U.S. city average. Because the sample size of a local area is smaller, the local area index is subject to substantially more sampling and other measurement error than the national index. In addition, local indexes are not adjusted for seasonal influences. As a result, local area indexes show greater volatility than the national index, although their long-term trends are quite similar. NOTE: Area indexes do not measure differences in the level of prices between cities; they only measure the average change in prices for each area since the base period.

The Chicago-Gary-Kenosha, Ill.-Ind.-Wis. consolidated area covered in this release is comprised of Cook, DeKalb, DuPage, Grundy, Kane, Kankakee, Kendall, Lake, McHenry, and Will Counties in Illinois; Lake and Porter Counties in Indiana; and Kenosha County in Wisconsin.

Information in this release will be made available to sensory impaired individuals upon request. Voice phone: 202-691-5200; TDD message referral phone number:  1-800-877-8339.

For personal assistance or further information on Consumer Price Indexes, as well as other Bureau products, contact the Midwest Information Office at (312) 353-1880 from 8:00 a.m. to 4:00 p.m. CT.