July 30, 2007 (The Editor’s Desk is updated each business day.)

Energy prices in 2006

Energy inflation slowed dramatically in 2006 and was most responsible for the lower increase that year in the consumer price index for all items.

[Chart data—TXT]

Energy prices increased 2.9 percent last year, after rising 17.1 percent in 2005. The all items index increased 2.5 percent in 2006, compared with 3.4 percent during 2005.

A double-digit decrease in utility (piped) natural-gas prices was the main factor behind the deceleration in energy prices. A significant slowdown in motor fuel inflation was a key element as well.

Gasoline prices increased 6.4 percent in 2006 after rising 16.1 percent in 2005. In December 2005, the average price per gallon of regular unleaded gasoline was $2.19. By December 2006, the price had risen to $2.33.

During 2006, as natural-gas production capacity was restored and as supplies recovered following the previous years’ hurricanes, natural-gas prices decreased 14.2 percent, after increasing 30.2 percent in 2005.

The electricity index increased 7.5 percent last year, compared with 10.7 percent in 2005. The increases in 2005 and 2006 were the largest in this index since 1981.

These data are from the BLS Consumer Price Index program. Annual percent changes are December-to-December changes. For additional information on consumer price changes in 2006, see "Consumer prices rose less in 2006 than in 2005," by Todd Wilson, Monthly Labor Review Online, May 2007.