By Bob Yonkers, IDFA Chief Economist, Ph.D.

Consumer prices overall rarely decline from year to year, according to data from the U.S. Bureau of Labor Statistics (BLS), but retail price trends were anything but normal in 2009. In fact, the average Consumer Price Index for All Items in 2009 declined 0.31 percent, the first year-to-year decline since 1955.

While watchers of economic news are likely familiar with the overall CPI, consumer price indices are published by BLS for a number of product categories.

The CPI-All Food, for example, increased only 0.89 percent on average in 2009, far below the annual average change of 3.66 percent since 1950; the annual average CPI-All Food has not seen a year-to-year decline since 1959. Then there is the CPI-Food At Home, which grew by only 0.46 percent in 2009 (compared to an average increase of 3.52 percent since 1950) and has not seen a year-to-year decline since 1967.

BLS also publishes a number of consumer price indices specifically for dairy, including the CPI-All Dairy and Related Products, which on average fell by 6.36 percent in 2009. This was by far the largest year-to-year decline since the BLS began publishing this data series in 1989; the previous record annual average decline was 1.11 percent in 1991.

There are four individual dairy product categories for which a consumer price index is published by BLS. The CPI-All Fluid Milk fell 13.15 percent on average in 2009, the third such decline since this data series began in 1999 (previous year-to-year declines were 1.19 percent in 2006 and 1.86 percent in 2002). The CPI-Cheese and Related Products declined 5.17 percent on average in 2009, only the fourth decline since the start of this data series in 1978 and also the largest decline.

The CPI-Butter has experienced the most, and largest, ups and downs of all the dairy CPIs over the years. One problem is that BLS did not collect and publish data for this series between 1987 and 1998; for the rest of the years since 1950, this series has increased year-to-year by over 10 percent seven times (the highest increase being 29.1 percent in 2004), and it has fallen year-to-year by over 5 percent also seven times (the largest drop being 9.26 percent in 2002). In 2009, the CPI-Butter fell by 7.19 percent on average.

BLS has been collecting and publishing data on the CPI-Ice Cream and Related Products since 1990. This price series is the most stable of the dairy CPIs, never increasing more than 5.5 percent (in 2001) and only declining year-to-year twice: 1.99 percent in 2003 and 0.36 percent in 2005. On average in 2009, the CPI-Ice Cream and Related Products increased by 1.99 percent, the only dairy CPI to increase on average last year.

Overall, consumer prices declined in 2009 on average for the first time since 1955. While consumer prices for all food and food-at-home in 2009 increased less than usual, dairy consumer prices mostly declined in 2009, which is not typical. These declines were likely a key factor driving growth in domestic consumer sales of dairy products last year.