The Consumer Price Index for All Urban Consumers (CPI-U) in the Cincinnati-Hamilton area declined 0.3 percent from the second half of 2014 to the second half of 2015, the U.S. Bureau of Labor Statistics reported today. Regional Commissioner Charlene Peiffer noted that the all items less food and energy index was 1.1 percent higher compared to its second half 2014 level as price increases were noted in the categories for shelter, medical care, and other goods and services. Food prices rose 0.7 percent over the year while the index for energy decreased 12.4 percent. (See chart 1.)

Food

The 0.7 percent rise in food prices over the year was attributed to a 2.5 percent increase in costs for food eaten away from home (restaurant, cafeteria, and vending purchases). Grocery food prices, on-the-other-hand, were down 0.6 percent compared to their year ago levels. In the previous annual period (second half 2013 to second half 2014), food prices were up 2.4 percent in the Cincinnati area.

Energy

All three major components of the energy index were down compared to their second half 2014 levels and contributed to the 12.4 percent annual decline in energy costs in the Cincinnati area. Gasoline prices experienced the largest decline, down 20.7 percent followed by a 9.0 percent decrease in costs for utility (piped) gas service. Electricity costs were 0.5 percent lower than their second half 2014 levels. Energy costs declined 3.1 percent in the prior annual period.

All items less food and energy

The 1.1 percent over the year increase in the all items less food and energy index was primarily due to a 1.2 percent annual gain in shelter costs. Medical care (2.6 percent) and other goods and services (4.7 percent) also experienced increases and contributed to the rise in the all items less food and energy index.

The first half 2016 Consumer Price Index for Cincinnati-Hamilton is scheduled to be released on Friday, July 15, 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 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/pdf/homch17.pdf.

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 Cincinnati-Hamilton, Ohio-Ky.-Ind. consolidated area covered in this release is comprised of Dearborn and Ohio Counties in Indiana; Boone, Campbell, Gallatin, Grant, Kenton, and Pendleton Counties in Kentucky; and Brown, Butler, Clermont, Hamilton and Warren Counties in Ohio.

Information in this release will be made available to sensory impaired individuals upon request. Voice phone: (202) 691-5200; Federal Relay Service: (800) 877-8339.