The Consumer Price Index for All Urban Consumers (CPI-U) in the Midwest was down 0.7 percent in December, following declines of 0.5 percent in October and 0.6 percent in November, the U.S. Bureau of Labor Statistics reported today. The monthly decrease was largely attributable to a 14.0-percent drop in motor fuel prices. Overall, the energy index declined 6.5 percent. The index for food rose 0.3 percent while the index for all items less food and energy decreased 0.2 percent over the month.

The CPI-U for the Midwest advanced 0.7 percent in 2014. This marks the third time since the series began in 1967 that prices have increased less than 1.0 percent in a calendar year–prices declined 0.3 percent in 2008 and were up 0.6 percent in 1986. Food prices increased 3.5 percent in 2014 and the energy index, which includes motor fuel and household fuels, was down 8.8 percent. Excluding food and energy, the CPI-U rose 1.4 percent from December 2013 to December 2014. (See chart 1.)

Food

Food prices in the Midwest increased 0.3 percent in December. Higher costs for food at home and for food away from home, each up 0.3 percent, contributed to the monthly advance.

From December 2013 to December 2014, the index for food was up 3.5 percent led by a 3.4-percent rise in costs for food at home. Prices for food away from home contributed to the increase with a gain of 3.7 percent; this was the largest calendar year increase in this index since 2008.

Energy

The energy index registered its sixth consecutive monthly decline, falling 6.5 percent, and had the greatest downward impact on the all items index in December. The monthly decrease in energy costs was largely attributable to a 14.0-percent drop in motor fuel prices. Compared to their recent peaks in June 2014, energy prices have dropped 21.8 percent and motor fuel prices have fallen 33.3 percent. In contrast, electricity prices rose 1.5 percent and costs for utility (piped) gas service increased 3.2 percent in December 2014.

The index for energy fell 8.8 percent in 2014 led by a drop of 20.7 percent in motor fuel prices; the largest calendar year declines since 2008 for these indexes. The motor fuel index recorded over-the-year decreases in all but 3 months of 2014. Moderating the overall decline in energy costs, electricity prices advanced 4.9 percent and costs for utility (piped) gas service were 10.3 percent higher over the year.

All items less food and energy

The index for all items less food and energy for the Midwest declined 0.2 percent in December. Expenditure categories registering lower prices over the month included apparel (-3.6 percent) and used cars and trucks (-1.7 percent). In contrast, medical care and recreation, each up 0.2 percent, were among the expenditure categories posting higher prices over the month.

The index for all items less food and energy was up 1.4 percent from December 2013 to December 2014–the same increase as in the prior calendar year. Higher costs for shelter (2.1 percent) and medical care (3.3 percent) led the advance. Within medical care, the medical care commodities index (6.4 percent) recorded the largest calendar year increase since 1991, while the medical care services index (2.4 percent) posted the smallest calendar year gain in the history of the index.

The Midwest Consumer Price Index for All Urban Consumers (CPI-U) stood at 222.821 in December 2014. A typical market basket of goods and services that cost $100.00 in the 1982-84 base period cost $222.82 in December 2014. Because regional CPI data are not adjusted for seasonal price variation, consumers and businesses should be cautious in drawing conclusions about long-term retail price trends from short-term changes in the regional indexes.

CPI-W

In December, the Midwest Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) was 217.963, down 0.9 percent over the month. The CPI-W increased 0.4 percent over the year.

Table A. Midwest Region CPI-U monthly and annual percent changes (not seasonally adjusted)

Month	2009		2010		2011		2012		2013		2014
	Monthly	Annual	Monthly	Annual	Monthly	Annual	Monthly	Annual	Monthly	Annual	Monthly	Annual
January	0.6	-0.3	0.5	2.9	0.5	1.9	0.6	2.8	0.1	1.3	0.5	1.4
February	0.3	-0.2	0.0	2.5	0.3	2.2	0.2	2.7	1.1	2.2	0.6	0.9
March	0.3	-0.8	0.4	2.6	0.9	2.7	1.0	2.8	0.2	1.4	0.9	1.5
April	0.2	-1.5	0.2	2.7	0.7	3.3	0.2	2.3	-0.1	1.2	0.3	1.9
May	0.4	-1.9	0.1	2.4	0.6	3.8	-0.1	1.5	0.5	1.8	0.2	1.6
June	1.1	-1.7	0.0	1.2	0.0	3.9	-0.1	1.4	0.3	2.2	0.5	1.7
July	-0.3	-2.5	0.2	1.7	0.1	3.8	0.0	1.3	-0.4	1.8	-0.3	1.8
August	0.4	-1.8	0.2	1.5	0.2	3.8	0.7	1.8	0.1	1.2	-0.2	1.6
September	0.0	-1.7	0.1	1.6	0.2	3.9	0.3	1.9	0.1	1.0	0.1	1.6
October	0.1	-0.2	0.0	1.5	-0.6	3.3	-0.3	2.2	-0.5	0.8	-0.5	1.6
November	0.3	2.2	0.1	1.2	0.0	3.3	-0.4	1.8	-0.2	1.0	-0.6	1.2
December	-0.3	3.0	0.2	1.8	-0.2	2.8	-0.2	1.8	-0.2	1.0	-0.7	0.7

The January 2015 Consumer Price Index for the Midwest region is scheduled to be released on Thursday, February 26, 2015.

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 89 percent of the total population and (2) a CPI for Urban Wage Earners and Clerical Workers (CPI-W) which covers approximately 28 percent 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 26,000 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/cpi/.

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 areas; they only measure the average change in prices for each area since the base period.

The Midwest region is comprised of Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin.

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