Inflation Trends and the RCF Inflation Scorecard – February 2023

Inflation’s Slow Decline Continues

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

The Current Situation

In February 2023, consumer prices were 6.0% higher than a year earlier, a decline from the 6.4% inflation rate in January.  Core inflation (excluding food and energy) was 5.5% in February, a tiny decline from last month’s 5.6% inflation rate.  Core inflation has been particularly sticky.  It has only dropped by about 1% from its peak level of 6.6% in 2022, compared with overall inflation which has fallen from a peak of 9.1% to the current 6.0% rate. 

The monthly data were not particularly encouraging.  Prices rose 0.4% in February and core prices increased 0.5%; increases consistent with 5% to 6% annual inflation, well above the Fed’s 2% target.   Even if one focuses on the last three months, inflation is in the 4% to 5% annualized range. 

One key factor aggravating the inflation numbers is the price of shelter which continues to rise more than most other prices.  Excluding shelter costs, inflation was 5% in February, a full point below the headline number.  As has been discussed here and elsewhere, shelter prices as measured by the BLS tend to lag actual changes in rents and homeowner costs so CPI excluding shelter might be a better guide to current conditions.  But 5% inflation is hardly good news.  

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 8.7% of the typical consumer’s budget; it has a weight of 8.73 out of a total index of 100.  In February, the BLS changed the weights of the categories in the CPI index to better reflect current spending patterns by consumers. 

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).  Because deflation is showing up across more categories, we’ve added a separate measure of the total weight of deflation within the CPI index. 

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 to the Federal Reserve’s target inflation rate of 2% per year.   

The first metric illustrates the persistence of inflation as about 40% of the weighted index (primarily homeowner costs) showed no change in monthly inflation in February vs. January.  For the components that did change, 15% experienced deflation (a decline in prices in February), 23% showed falling inflation, while another 23% showed rising inflation. 

Our second metric shows that 71% of the weighted CPI had February price increases above 0.2%.  That was an improvement on January’s 81%, but the bottom line is that most of the CPI continues to rise faster than the Fed’s inflation target.  

RCF Inflation Scorecard: February 2023

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 February was higher or lower than monthly inflation in January.  Deflation means prices fell in February compared to January.


  • As mentioned earlier, the BLS changed the weights of the different components of the CPI.  Of note, the weights given to housing and food-at-home increased while the weight given to used cars and trucks decreased.  Had the old weights been used, inflation would have been recorded as 5.6% in February instead of 6.0% because higher weights were given to components which have seen greater price increases and, as a result, account for larger shares of consumer spending.
  • As for housing, prices for rent and owner-occupied equivalent rent were up 0.8% and 0.7% respectively in February, and 8.8% and 8.0% compared to a year ago.  But with home prices falling across many markets, it is likely that housing cost inflation will also slow, and the higher weight given to housing in the new CPI index might start to decline more quickly.  Given all the issues with housing prices (new weights, lagged price measures), focus will probably turn to inflation measures that exclude these prices.
  • Food-at-home prices rose just 0.3% in February, the smallest monthly increase since May of 2021. 
  • Several components saw price declines in February: used cars and trucks (-2.8%), household energy (-2.0%), medical care (-0.5%) and alcoholic beverages (-0.3%).  Of these, only used cars and trucks had lower prices than a year ago (-13.6%) while household energy was up 12.9% over the same period. 
  • Motor fuel prices were up 0.9% in February, not as bad as the 2.3% increase in January.  It’s clearly a volatile category; despite these recent increases motor fuel prices are 1.7% lower than they were a year ago.
  • Public transportation (which includes airfares) were up 3.2% in February and 18.0% vs. a year ago.  Those are the largest monthly and annual price increases of any major CPI component.