Inflation Trends and the RCF Inflation Scorecard – August 2022

Core Inflation Increases in August

Peter Bernstein, Chief Economist,, 312-431-1540 x1515

The Current Situation

The overall Consumer Price Index in August was up just 0.1% in August, the second month of low headline inflation.  The bad news is that core prices (excluding food and energy) surged 0.6% in the month and are up 6.3% from a year ago, barely lower than the peak core inflation rate of 6.4% in March.  Aside from a welcome drop in fuel prices (down 10.5% in August vs. July) inflation is showing no signs of abating despite the Federal Reserve’s numerous interest rate hikes.   

The bad news on core prices reduces the chance that the economy will experience a soft-landing in which inflation declines meaningfully but employment continues to grow, if only modestly. It is now more likely that a more substantial slowdown of economic activity will be needed to bring down the pace of price increases.

Some relatively good news comes from the Producer Price index data from August.  Overall PPI fell 0.1% in the month while core PPI was up only 0.2%.  But the year-over-year inflation rates for these two measures were 8.7% and 8.1%, both higher than their consumer price counterparts. 

RCF’s Inflation Scorecard

RCF’s Inflation Scorecard is based on analysis of 20 different price series comprising 98% of the total consumer price index.  Each of these price series represents a portion of the CPI based on household spending patterns.  For example, food purchased for at-home consumption is about 8% of the typical consumer’s budget; it has a weight of 8.17 out of a total index of 100 as detailed later in this report.

Our scorecard presents two metrics to track month-to-month price increases. 

The first metric is the share of the index for which inflation in the most recent month is rising (greater than the prior month’s inflation) vs. the share of the index for which inflation is falling (lower than the prior month) or prices fell (deflation).  Our second metric is the share of the index for which the most recent month’s inflation exceeded 0.2%, a monthly rate that corresponds closely to the Federal Reserve’s target inflation rate of 2% per year.   

In August, 65% of the weighted CPI components recorded higher monthly inflation than they did in July.  In July, just 14% of the CPI components saw rising monthly inflation.  Thus, for most of the CPI categories, inflation is getting worse, not better.  Moreover, 74% of the CPI recorded monthly inflation above the Federal Reserve’s target of 0.2% per month.  That figure is the lowest share since September of 2021 providing at least a glimmer of hope on the inflation front.

RCF Inflation Scorecard: August 2022  

Analysis of Individual Components of the Consumer Price Index

Sources: Bureau of Labor Statistics and RCF Calculations: 1. Inflation direction indicates whether monthly inflation in August was higher or lower than monthly inflation in July.  Deflation means prices fell in August compared to July.


  • Motor fuel prices were down 10.5% in August and have fallen 17.3% since their peak in June.  But they are still up 26% compared to a year ago. 
  • Food at-home prices rose 0.7% in August.  While that is an improvement on the 1.3% increase in July, food-at-home prices are 13.5% higher than they were a year ago.   
  • Housing costs were up 0.7% in August.  They represent 42% of the core CPI index and are the biggest driver of higher core inflation during the month. 
  • Other than motor fuel, two other CPI components saw a price decline in August – used cars and public transportation, which includes airfares.  The drop in airfares is likely a byproduct of falling fuel prices which have not yet had an apparent impact of reducing inflation in other sectors of the economy.
  • Although not part of our Inflation Scorecard, workers’ average hourly wages have increased more than inflation for the second straight month.  Wages have increased a total of 0.8% over the past two months while the CPI is up just 0.1%.  This has helped workers recover some of the decline in their real earnings over the past year.