The Consumer Price Index for All Urban Consumers (CPI-U) in the Midwest was down 0.6 percent in December, the U.S. Bureau of Labor Statistics reported today. This follows a decrease of 0.5 percent in November and marks the fourth consecutive monthly decline. The December decrease was largely attributable to a 12.3-percent drop in motor fuel prices. The broader energy index was 5.9 percent lower over the month. Food prices, up 0.1 percent, and prices for all items less food and energy, down 0.2 percent, were little changed. (Data in this report are not seasonally adjusted. Accordingly, month-to-month changes may reflect the impact of seasonal influences.)

The CPI-U for the Midwest was unchanged from December 2014 to December 2015, ending eleven consecutive months of over-the-year decline. (See chart 1 and table A.) Food prices increased 0.6 percent, but the energy index, which includes motor fuel and household fuels, fell 14.8 percent. Excluding food and energy, the CPI-U rose 1.5 percent in 2015. (See table 1.)

Food

Food prices in the Midwest were virtually unchanged in December, up a slight 0.1 percent. The index for food at home edged up 0.2 percent over the month following a decrease of 0.8 percent in November.  Costs for food away from home (0.1 percent) changed little over the month.  

In 2015, the index for food rose 0.6 percent, the smallest over-the-year increase since June 2010.  Rising costs for food away from home (2.2 percent) were responsible for the yearly advance. Prices for food at home had their third consecutive over-the-year decline, down 0.4 percent from December 2014 to December 2015.  Prior to this, food at home prices had not decreased over the year since early 2010.

Energy

The energy index registered its sixth consecutive monthly decline, falling 5.9 percent in December, and had the greatest downward impact on the all items index. The decrease in energy costs was largely attributable to a 12.3-percent drop in motor fuel prices, the largest monthly dip since January 2015. Lower costs for utility (piped) gas service (-1.6 percent) also contributed to the monthly decline, but electricity prices were essentially unchanged (0.1 percent).

Energy prices fell 14.8 percent from December 2014 to December 2015. Motor fuel prices continued to decline, dropping 22.4 percent in 2015. The index for motor fuel declined 20.7 percent in 2014 and was 3.5 percent lower in 2013. Costs for utility (piped) gas service were down 22.8 percent from December 2014 to December 2015, while electricity prices were 1.0 percent higher. By comparison, these indexes were up 10.3 percent and 4.9 percent, respectively, in 2014.

All items less food and energy

The index for all items less food and energy for the Midwest crept down 0.2 percent in December after registering no change in the prior month. A decline of 3.2 percent in prices for apparel had the greatest impact on the index. Costs for shelter were unchanged over the month due to offsetting movements among its components. Other expenditure categories that registered no change over the month included medical care, education and communication, and other goods and services. 

The index for all items less food and energy was up 1.5 percent from December 2014 to December 2015. Higher costs for shelter (2.3 percent) led the advance. Medical care services (2.6 percent), other goods and services (2.0 percent), and education and communication (0.9 percent) were among the categories contributing to the increase in 2015. In contrast, lower apparel prices (-2.1 percent) had the largest offsetting effect. 

The Midwest Consumer Price Index for All Urban Consumers (CPI-U) stood at 222.722 in December 2015. A typical market basket of goods and services that cost $100.00 in the 1982-84 base period cost $222.72 in December 2015. 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 Worker (CPI-W) was 217.076, down 0.7 percent over the month. The CPI-W decreased 0.4 percent over the year.

Table A. Midwest region CPI-U 1-month and 12-month percent changes, all items index, not seasonally adjusted

Month	2011		2012		2013		2014		2015
	1-month	12-month	1-month	12-month	1-month	12-month	1-month	12-month	1-month	12-month
January	0.5	1.9	0.6	2.8	0.1	1.3	0.5	1.4	-0.6	-0.3
February	0.3	2.2	0.2	2.7	1.1	2.2	0.6	0.9	0.3	-0.5
March	0.9	2.7	1.0	2.8	0.2	1.4	0.9	1.5	0.6	-0.9
April	0.7	3.3	0.2	2.3	-0.1	1.2	0.3	1.9	0.1	-1.1
May	0.6	3.8	-0.1	1.5	0.5	1.8	0.2	1.6	0.4	-0.8
June	0.0	3.9	-0.1	1.4	0.3	2.2	0.5	1.7	0.5	-0.7
July	0.1	3.8	0.0	1.3	-0.4	1.8	-0.3	1.8	0.0	-0.5
August	0.2	3.8	0.7	1.8	0.1	1.2	-0.2	1.6	0.0	-0.3
September	0.2	3.9	0.3	1.9	0.1	1.0	0.1	1.6	-0.3	-0.8
October	-0.6	3.3	-0.3	2.2	-0.5	0.8	-0.5	1.6	-0.1	-0.3
November	0.0	3.3	-0.4	1.8	-0.2	1.0	-0.6	1.2	-0.5	-0.2
December	-0.2	2.8	-0.2	1.8	-0.2	1.0	-0.7	0.7	-0.6	0.0

The January 2016 Consumer Price Index for the Midwest region is scheduled to be released on Friday, February 19, 2016.

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 6,000 housing units and approximately 24,000 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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