Inflation Trends and the RCF Inflation Scorecard – July 2022

Finally, Some Relief from Rising Prices

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

The Current Situation

The Consumer Price Index in July was unchanged vs. June, providing at least a temporary respite from rising prices.  Measured on a year-over-year basis, prices in July were up 8.5%, a drop from the 9.0% year-over-year increase in June.  Core CPI (excluding food and energy prices) was up 0.3% in July and 5.9% vs. a year ago.  More good news came from a separate report that showed producer prices falling in July even though they are still up more than 10% from last year.

The apparently conflicting information from July – little or no inflation compared to the prior month, but high inflation compared to the prior year – is entirely a function of how each measure of inflation is calculated.  The year-over-year number for July includes all the inflation that occurred in the prior 11 months.  Even if prices didn’t change for the rest of 2022, the year-over-year inflation rate would still be more than 5%.  That’s a main reason why our scorecard focuses on month-to-month changes, which give a sharper view of what is currently happening to prices.

However, a single month of good news is not enough for us to pop the champagne, especially when so much of the decline in inflation was due to a drop in gasoline prices alone.  Core inflation seems stuck at about 6%.  Monthly core prices have risen at least 0.5% in 8 of the last 10 months.   We will want to see a few more months of small increases in the Core CPI before we are convinced that inflation is in permanent decline.  No doubt the Federal Reserve views things similarly.

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.   

Interestingly, our two metrics are telling different stories about inflation in July.  Three-fourths of the CPI weighted index saw lower inflation in July than in June.  That makes July the first month in more than a year in which more than half of the CPI index weight slowed falling inflation.  Moreover, 22% of the index saw price declines in July (deflation). 

At the same time, three-fourths of the CPI index still has a monthly inflation rate greater than 0.2%.  That’s an improvement from June when nearly all the CPI components had prices increases above 0.2% but shows that inflation remains broad-based.  The conclusion from our two metrics is that inflation is falling across a wide range of products but also across a wide range of products inflation is still too high.

RCF Inflation Scorecard: July 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 July was higher or lower than monthly inflation in June.  Deflation means prices fell in July compared to June.


  • Motor fuel prices fell 7.6% in July but are still 44% above where they were a year ago.  Altogether, 7 of our 20 CPI components saw price declines (deflation) in July.
  • Food prices may be replacing gasoline prices as consumers’ major headache.  Food-at-home prices rose 1.3% in July and are up 13.1% over the past year.  Moreover, food-at-home is one of only three of our CPI components where inflation worsened in July compared to June. 
  • Housing costs were up but the increase was a bit lower in July than in June.  Even so, the 0.7% monthly increase in rents and the 0.6% monthly increase in homeowners equivalent rent remain key drivers of core inflation.   
  • Reports that retailers may be offering bigger discounts to sell their excess inventory might be coming to fruition as apparel prices fell slightly in July, perhaps the beginning of a larger downward trend. 
  • For years, health care prices rose faster than overall inflation but that has reversed.  Medical care inflation is slowing with prices up just 4.8% vs. a year ago, a notably smaller increase than the overall CPI.