Inflation Trends and the RCF Inflation Scorecard – May 2022

Food and Energy Prices Drive Inflation to New 40-Year High

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

The Current Situation

Consumer prices in May were 8.5% higher than a year earlier as food and energy prices continued to surge at double-digit rates.  A scant glimmer of hope is that core-inflation (which excludes food and energy prices) decreased a tick, falling from 6.1% to 6.0.%.   This is of little consolation for people who of course must pay for food and energy, but it illustrates an interesting dynamic regarding the Fed’s effort to bring inflation under control.  

The Fed focuses on core inflation because it views higher food and energy prices as being driven by events largely out of its control.  The war in Ukraine has disrupted the global supply of oil, fertilizer, grains and other food products, pushing their prices higher but also reflecting circumstances that will not be resolved through increases in the fed funds rate.  Furthermore, the Fed’s preferred measure of inflation is the core price index for personal consumption expenditures (core PCE), not the core CPI inflation measure.  The main difference between the CPI and the PCE is that the CPI measures prices that consumers see whereas the PCE measures prices of goods and services that consumers buy.  As prices have risen, consumers have shifted their spending to partly mitigate the price impacts which is why the PCE inflation measure is lower than the CPI measure. 

That said, core PCE inflation has stabilized at around 5% in recent months but that is still well above the Fed’s 2% goal.  It will be interesting to see how the Fed’s interest rate policy is affected if core PCE inflation declines while headline CPI inflation continues at a much higher rate.  In any case, it seems likely that the inflationary impacts of the war in Ukraine will continue for some time and that the gap between overall inflation and core inflation will persist.

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).  Over half (55% of the CPI weight) of the components saw rising inflation in May while only 15% saw inflation decline vs. the prior month.   The 55% weight of rising inflation is the highest since September 2021. 

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 May, a stunning 91% of the CPI components increased in price by more than 0.2%.  Thus, our metrics show that while food and energy prices remain the big drivers of inflation, prices are rising at a too-high rate across a broad range of goods and services.   

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


  • Seven of the components’ prices are up more than 10% vs. a year ago.  They include food at home, household energy, and motor fuel, all of which are being impacted by the war in Ukraine.  Other fast rising components include new and used cars, lodging away from home and public transportation, which includes airfares.  Prices for the latter two components are being pushed up by increased travel demand.  Higher fuel prices are also leading to higher airfare costs. 
  • Rent and owner’s equivalent rent prices continue to creep up with monthly increases of 0.6% in May.  Since these two components make up almost one-third of the CPI, it will be hard to see much reduction in overall inflation as long as these prices continue to rise at their current rates. 
  • Although it only represents about 4% of the typical consumer’s budget, gasoline prices are for many people the most obvious sign of higher inflation.  Motor fuel prices (which include more than just gasoline) are up 49% vs. a year ago while gasoline prices have doubled from their pre-pandemic price from February 2020.  This shows that in addition to the war in Ukraine, other supply and demand changes have been a source of rising energy costs.