The following is the un-edited press release from the Bureau of Labor Statistics of the U.S. Department of Labor.


CONSUMER PRICE INDEX: DECEMBER 2005

The Consumer Price Index for All Urban Consumers (CPI-U) decreased
0.4 percent in December, before seasonal adjustment, the Bureau of Labor
Statistics of the U.S. Department of Labor reported today. The December
level of 196.8 (1982-84=100) was 3.4 percent higher than in December 2004.

The Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W) decreased 0.5 percent in December, prior to seasonal adjustment.
The December level of 192.5 was 3.5 percent higher than in December 2004.

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U)
decreased 0.3 percent in December on a not seasonally adjusted basis. The
December level of 114.0 (December 1999=100) was 2.8 percent higher than in
December 2004. Please note that the indexes for the post-2003 period are
subject to revision.

CPI for All Urban Consumers (CPI-U)

On a seasonally adjusted basis, the CPI-U decreased for the second
consecutive month--down 0.1 percent in December--again reflecting a large
decline in energy prices. The index for energy declined 2.2 percent in
December, its third consecutive monthly decrease. Within energy, the
index for petroleum-based energy declined 2.7 percent and the index for
energy services fell 1.7 percent. The index for food rose 0.2 percent in
December, following increases of 0.3 percent in each of the preceding
three months. The index for all items less food and energy rose 0.2
percent in December, the same as in each of the preceding two months,
after registering increases of 0.1 percent in each of the prior five
months. Shelter costs rose 0.3 percent in December and accounted for
about 70 percent of the advance in the index for all items less food and
energy.
Consumer prices declined at a seasonally adjusted annual rate (SAAR)
of 1.6 percent in the fourth quarter of 2005. This followed increases in
the first three quarters at annual rates of 4.3, 1.9, and 9.4 percent,
respectively. For the 12 month period ended in December, the CPI rose 3.4
percent. This compares with an increase of 3.3 percent in 2004. In 2005,
the index for energy rose 17.1 percent, following a 16.6 percent increase
in 2004, and accounted for about 40 percent of the overall advance in the
CPI-U. While the increases in the overall energy indexes for 2004 and
2005 were similar, the composition was different. Petroleum based energy
accounted for nearly 80 percent of the 2004 increase, but just over half
of the 2005 increase in the energy component. The food index, which rose
2.7 percent in 2004, increased 2.3 percent in 2005. The index for food at
home rose 1.7 percent in 2005, following a 2.4 percent increase in 2004.
Smaller increases in the indexes for fruits and vegetables and for dairy
products were largely responsible for the moderation.

Excluding food and energy, the CPI-U advanced at a 2.8 percent SAAR
in the fourth quarter, following increases at rates of 3.3, 1.2, and 1.4
percent in the first three quarters of 2005. The 2.2 percent advance for
all of 2005 was the same as in 2004. Even within the index for all items
less food and energy, price movements of the major groups were similar in
the two years. The larger increase in the housing group and the smaller
advance in the transportation component in 2005 were largely attributable
to the relative movements of the energy components within the groups
during the two years. Household fuels rose 18.0 percent in 2005 after
advancing 8.4 percent in 2004, while motor fuels rose 16.2 percent after
increasing 26.1 percent in 2004. The annual rates for selected groups for
the last eight years are shown below.
The food and beverages index rose 0.1 percent in December. The index
for food at home also advanced 0.1 percent after registering increases of
0.3 percent in each of the preceding three months. The index for fruits
and vegetables increased 0.9 percent in December. Increases in the
indexes for fresh vegetables and for processed fruits and vegetables--up
2.8 and 1.7 percent, respectively--more than offset a 1.4 percent decrease
in the index for fresh fruits. (Prior to seasonal adjustment, fresh fruit
prices rose 0.5 percent.) The index for other food at home increased 0.3
percent, reflecting a 1.0 percent increase in the sugar and sweets
component. Partially offsetting these increases were declines in the
indexes for cereal and bakery products, for dairy products, and for
nonalcoholic beverages--down 0.2, 0.3, and 0.5 percent, respectively. The
index for meats, poultry, fish and eggs was unchanged in December. A 1.2
percent increase in beef prices was offset by declines in prices for
poultry, for pork, and for other meats. During the 12 month period ended
in December 2005, prices for beef and poultry increased 2.2 and 0.3
percent, respectively, while pork prices declined 0.1 percent. In 2005
each of the six major grocery store food groups registered an increase in
prices, with the index for nonalcoholic beverages the largest at 3.5
percent and the index for fruits and vegetables the smallest at 0.6
percent. The other two components of the food and beverages index--food
away from home and alcoholic beverages--increased 0.2 and declined 0.4
percent, respectively, in December and rose 3.2 and 1.3 percent in 2005.

The index for housing increased 0.1 percent in December. Increases
in the indexes for shelter and for household furnishings and operations--
up 0.3 and 0.5 percent, respectively--more than offset a 1.4 percent drop
in the index for fuels and utilities. The index for fuel oil declined for
the third consecutive month--down 2.5 percent in December--but advanced
27.2 percent during the last 12 months. In December, the indexes for
natural gas and for electricity declined 3.5 and 0.6 percent,
respectively. During the 12 month period ended in December, however,
charges for natural gas and for electricity rose 30.2 and 10.7 percent.
Within shelter, the indexes for owners'' equivalent rent and for rent rose
0.3 and 0.1 percent, respectively, and the index for lodging away from
home rose 0.9 percent. (Prior to seasonal adjustment, the index for
lodging away from home declined 1.9 percent.) During the 12 month period
ended in December, the indexes for lodging away from home, for rent, and
for owners'' equivalent rent, rose 3.5, 3.1, and 2.5 percent, respectively.
The index for household furnishings and operations rose 0.7 percent during
the last 12 months, following an increase of 0.6 percent in all of 2004.

The index for apparel declined 0.3 percent in December. (Prior to
seasonal adjustment, apparel prices fell 3.3 percent, largely as a result
of pre-holiday discounting.) During the 12 month period ended in
December, apparel prices declined 1.1 percent, their eighth consecutive
annual decline. Prices for men''s, for boys'', and for girls'' apparel each
were lower than 12 months earlier, but prices for women''s clothing rose
slightly in 2005.

The transportation index decreased 0.8 percent in December, largely
reflecting a 2.6 percent drop in the index for gasoline. Gasoline prices
declined for the third consecutive month--down 6.2 percent in December
--and have fallen 25.1 percent from their peak level reached in September.
As of December, however, gasoline prices were 16.1 percent higher than
their level a year ago. The index for new vehicles decreased for the
second consecutive month--down 0.1 percent in December. (As of December,
about 70 percent of the new vehicle sample was represented by 2006 models.
The 2006 models will continue to be phased in, with appropriate
adjustments for quality change, over the next several months as they
replace old models at dealerships.) New vehicle prices were 0.4 percent
lower than in December 2004. The index for used cars and trucks also
decreased 0.1 percent in December, but this index has risen 1.4 percent in
the last 12 months. The index for public transportation declined 0.9
percent in December, reflecting a 2.9 percent drop in airline fares.
Despite registering declines in four of the last five months, airline
fares increased 6.4 percent in 2005, their first annual advance since a
5.9 percent increase in 2000.

Medical care costs rose 0.1 percent in December. The index for
medical care commodities--prescription drugs, nonprescription drugs, and
medical supplies--increased 0.2 percent. The index for medical care
services rose 0.1 percent in December. The index for professional
services rose 0.1 percent while the index for hospital and related
services decreased 0.1 percent. (Prior to seasonal adjustment, the index
for hospital and related services increased less than 0.1 percent.) In
the 12 months ended in December 2005, the index for medical care rose 4.3
percent after increasing 4.2 percent in 2004. The index for prescription
drugs rose 4.4 percent during the 12 months ended in December, following
increases of 3.5 percent in 2004 and 2.5 percent in 2003. Charges for
hospital and related services increased 5.1 percent in the 12 month period
ended in December 2005, following a 5.2 percent rise in 2004.

The index for recreation was unchanged in December. Price increases
for cable and satellite television and radio service, for pets, pet
products and services, and for admissions to movies, theaters, concerts,
and sporting events were largely offset by decreases in the indexes for
toys, for sporting goods, for photography, and for recreational books.
During the 12 months ended in December, the indexes for cable and
satellite services and for admissions increased 3.3 and 3.5 percent,
respectively, accounting for over 95 percent of the advance in the
recreation index in 2005.

The index for education and communication rose 0.3 percent in
December. Educational costs increased 0.5 percent, while communication
costs declined 0.1 percent. During the 12 months ended in December,
educational costs rose 6.1 percent, largely as a result of a 6.6 percent
rise in the index for college tuition and fees. The index for
communication declined 1.3 percent during the last 12 months, reflecting
declines in prices for land-line long distance telephone services, for
wireless telephone services, and for personal computers and peripheral
equipment--down 1.7, 1.5, and 15.8 percent, respectively. Partially
offsetting these declines was a 3.3 percent increase in land-line local
telephone service charges.

The index for other goods and services increased 0.5 percent in
December to a level 3.1 percent higher than in December 2004. The index
for tobacco and smoking products rose 0.4 percent in December and 5.8
percent during the last 12 months.

CPI for Urban Wage Earners and Clerical Workers (CPI-W)

On a seasonally adjusted basis, the CPI for Urban Wage Earners and
Clerical Workers decreased 0.1 percent in December.
Recalculated Seasonally Adjusted Indexes to be Available on February 17, 2006

Each year with the release of the January CPI, seasonal adjustment factors
are recalculated to reflect price movements from the just-completed
calendar year. This routine annual recalculation may result in revisions
to seasonally adjusted indexes for the previous 5 years. BLS will make
available recalculated seasonally adjusted indexes, as well as
recalculated seasonal adjustment factors, for the period January 2001
through December 2005, on Friday, February 17, 2006. This date is two
working days before the scheduled release of the January 2006 CPI on
Wednesday, February 22, 2006.


Planned Changes in the Consumer Price Index in 2006

Expenditure Weight Update

Effective with release of data for January 2006, the Bureau of Labor
Statistics (BLS) will update the consumption expenditure weights in the
Consumer Price Index for All Urban Consumers (CPI-U) and Consumer Price
Index for Urban Wage Earners and Clerical Workers (CPI-W) to the 2003-04
period. The updated expenditure weights for these indexes will replace
the 2001-2002 weights that were introduced effective with the January 2004
CPI release. As originally announced by BLS in December 1998, CPI
expenditure weights will continue to be updated at two-year intervals
subsequent to the 2006 updating.
For the first six months of 2006, BLS will continue to calculate and
publish selected CPI-U and CPI-W """"overlap"""" indexes using the 2001-2002
expenditure pattern that was introduced into the CPI in 2004. These
indexes will be compiled on a not seasonally adjusted basis. Comparison
of these index series to the corresponding updated series will enable
users of the CPI to observe the effects of the expenditure weight change.
The subsequent expenditure updates scheduled in 2008 and every two years
thereafter also will be accompanied by the publication of overlap indexes
for a six-month period using the previous expenditure pattern.

C-CPI-U Index Revisions

As scheduled, effective with release of data for January 2006, the
Chained Consumer Price Index for All Urban Consumers (C-CPI-U) will
undergo its fourth annual index revision. C-CPI-U indexes for the 12
months of 2004 will be issued in final form and values for the 12 months
of 2005 will be revised and issued as interim. Calculation of the
preliminary versions of the C-CPI-U--the initial version for January and
the subsequent months of 2006 and the interim (revised initial) indexes
for 2005--will employ the 2003-04 expenditure weights also used in the CPI-
U and CPI-W. Note that the final values of the C-CPI-U employ monthly
expenditure weights corresponding to the price collection period in their
calculation. Thus, in calculation of the final (revised interim) C-CPI-U
values for the months of 2004, the biennial 2001-2002 expenditure weights
will be replaced with separate monthly expenditure weights.

Facilities for Sensory Impaired

Information from this release will be made available to sensory
impaired individuals upon request. Voice phone: 202-691-5200, Federal
Relay Services: 1-800-877-8339. For a recorded message of Summary CPI
data, call (202) 691-5200.

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 32 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 cover approximately 87 percent of the total population and
include 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.

The CPIs are based on prices of food, clothing, shelter, and fuels,
transportation fares, charges for doctors'' and dentists'' services, drugs,
and other goods and services that people buy for day-to-day living.
Prices are collected in 87 urban areas across the country from about
50,000 housing units and approximately 23,000 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. Prices of
fuels and a few other items are obtained every month in all 87 locations.
Prices of most other commodities and services are collected every month in
the three largest geographic areas and every other month in other areas.
Prices of most goods and services are obtained by personal visits or
telephone calls of the Bureau''s trained representatives.

In calculating the index, price changes for the various items in each
location are averaged together with weights, which represent their
importance in the spending of the appropriate population group. Local
data are then combined to obtain a U.S. city average. For the CPI-U and
CPI-W separate indexes are also published by size of city, by region of
the country, for cross-classifications of regions and population-size
classes, and for 27 local areas. Area indexes do not measure differences
in the level of prices among cities; they only measure the average change
in prices for each area since the base period. For the C-CPI-U data are
issued only at the national level. It is important to note that the CPI-U
and CPI-W are considered final when released, but the C-CPI-U is issued in
preliminary form and subject to two annual revisions.

The index measures price change from a designed reference date. For
the CPI-U and the CPI-W the reference base is 1982-84 equals 100.0. The
reference base for the C-CPI-U is December 1999 equals 100.
An increase of 16.5 percent from the reference base, 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.



Calculating Index Changes

Movements of the indexes from one month to another are
usually expressed as percent changes rather than changes in index
points, because index point changes are affected by the level of
the index in relation to its base period while percent changes are
not. The example below illustrates the computation of index point
and percent changes.

Percent changes for 3-month and 6-month periods are expressed
as annual rates and are computed according to the standard formula
for compound growth rates. These data indicate what the percent
change would be if the current rate were maintained for a 12-month
period.


Regions Defined

The states in the four regions shown in Tables 3 and 6 are listed below.

The Northeast--Connecticut, Maine, Massachusetts, New Hampshire, New York,
New Jersey, Pennsylvania, Rhode Island, and Vermont.

The Midwest--Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota,
Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin.

The South--Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky,
Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South
Carolina, Tennessee, Texas, Virginia, West Virginia, and the District of
Columbia.

The West--Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana,
Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.

A Note on Seasonally Adjusted and Unadjusted Data

Because price data are used for different purposes by different groups,
the Bureau of Labor Statistics publishes seasonally adjusted as well as
unadjusted changes each month.

For analyzing general price trends in the economy, seasonally adjusted
changes are usually preferred since they eliminate the effect of changes
that normally occur at the same time and in about the same magnitude every
year--such as price movements resulting from changing climatic conditions,
production cycles, model changeovers, holidays, and sales.

The unadjusted data are of primary interest to consumers concerned about
the prices they actually pay. Unadjusted data also are used extensively
for escalation purposes. Many collective bargaining contract agreements
and pension plans, for example, tie compensation changes to the Consumer
Price Index unadjusted for seasonal variation.

Seasonal factors used in computing the seasonally adjusted indexes are
derived by the X-12-ARIMA Seasonal Adjustment Method. Seasonally adjusted
indexes and seasonal factors are computed annually. Each year, the last 5
years of seasonally adjusted data are revised. Data from January 2000
through December 2004 were replaced in January 2005. Exceptions to the
usual revision schedule were: the updated seasonal data at the end of 1977
replaced data from 1967 through 1977; and, in January 2002, dependently
seasonally adjusted series were revised for January 1987-December 2001 as
a result of a change in the aggregation weights for dependently adjusted
series. For further information, please see """"Aggregation of Dependently
Adjusted Seasonally Adjusted Series,"""" in the October 2001 issue of the CPI
Detailed Report.

The seasonal movement of All items and 54 other aggregations is derived
by combining the seasonal movement of 73 selected components. Each year
the seasonal status of every series is reevaluated based upon certain
statistical criteria. If any of the 73 components change their seasonal
adjustment status from seasonally adjusted to not seasonally adjusted, not
seasonally adjusted data will be used for the last 5 years, but the
seasonally adjusted indexes will be used before that period. Note: 43 of
the 73 components are seasonally adjusted for 2005.

Seasonally adjusted data, including the All items index levels, are
subject to revision for up to five years after their original release.
For this reason, BLS advises against the use of these data in escalation
agreements.

Effective with the calculation of the seasonal factors for 1990,
the Bureau of Labor Statistics has used an enhanced seasonal adjustment
procedure called Intervention Analysis Seasonal Adjustment for some CPI
series. Intervention Analysis Seasonal Adjustment allows for better
estimates of seasonally adjusted data. Extreme values and/or sharp
movements which might distort the seasonal pattern are estimated and
removed from the data prior to calculation of seasonal factors. Beginning
with the calculation of seasonal factors for 1996, X-12-ARIMA software was
used for Intervention Analysis Seasonal Adjustment.

For the fuel oil, utility (piped) gas, motor fuels, and educational
books and supplies indexes, this procedure was used to offset the effects
that extreme price volatility would otherwise have had on the estimates of
seasonally adjusted data for those series. For the Nonalcoholic
beverages index, the procedure was used to offset the effects of labor and
supply problems for coffee. The procedure was used to account for unusual
butter fat supply reductions, changes in milk supply, and large swings in
soybean oil inventories affecting the Fats and oils series. For Dairy
products, it mitigated the effects of significant changes in milk, butter
and cheese production levels. For Fresh vegetable series, the method was
used to account for the effects of hurricane-related disruptions. For
Electricity, it was used to offset an increase in demand due to warmer
than expected weather, increased rates to conserve supplies, and declining
natural gas inventories. For new vehicle series, the procedure was used
to offset the effects of a model changeover combined with financing
incentives.



Available at: www.bls.gov/cpi