Inflation Trends and the RCF Inflation Scorecard – October 2022

Increasing Signs that Inflation is Declining

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

The Current Situation

The overall Consumer Price Index was up 0.4% in October and 7.8% vs. a year ago.  This marks a notable decline from the 9.0% year-over-year inflation rate recorded in June. More importantly, our detailed inflation metrics, discussed later in this report, show a broad lessening of inflationary pressures across most components of the CPI.  Core consumer prices (excluding food and energy) were up 0.3% in October, matching the lowest monthly increase so far this year.  Nevertheless, year-over-year core inflation remains high at 6.3%, though that is lower than the previous month’s 6.7% rate.  There was also good news on inflation from the 2022Q3 GDP report.  The GDP price index increased at a 4.1% annualized rate, less than half the annualized 9.0% increase in 2022Q2.  It was also the slowest quarterly increase since the end of 2020.  The GDP price index differs from the CPI in many ways.  It includes prices paid by businesses and governments as well as consumers, and it has a lower weight on consumer housing prices than in the CPI.  Differences aside, the report is more evidence that inflation is heading down.

It is always important to “look under the hood” when evaluating monthly inflation data.  The CPI hardly rose at all in July and August, but that was almost entirely due to a drop in gasoline prices.  In contrast, the declines we are seeing now are showing up in several components of the CPI.

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.   

Both of our metrics improved substantially in October.  Just 16.6% of our weighted CPI components showed rising inflation in the month, well below the 45.4% that did so in September.  The total weight of components with an inflation rate greater than 0.2% also fell to 66.8%, the lowest monthly figure in a year.  In other words, one-third of the CPI has price increases in line with the Fed’s 2% annual target, whereas as recently as June only one-tenth of the CPI was displaying low inflation.

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


  • A big driver of lower inflation in October was that several of the CPI components experienced deflation (falling prices) during the month.  Prices for household energy, apparel, used cars and trucks, and medical care all declined.  Used car and truck prices, which spiked in early 2021, are up only 2.0% compared to a year ago.
  • Rents and owners’ equivalent rents continue to be big drivers of inflation.  They were up 0.7% and 0.6% respectively in October.  It is generally recognized that the CPI measure of rents often lags actual changes in rents and evidence from other sources suggest rent inflation has slowed more than the official numbers suggest. 
  • Have you noticed what’s happened to airfares?  The sharp increase in the cost of flying shows up in public transportation component of the CPI.  It’s up 28.1% over the past year.  That’s partly a function of more travel demand which also explains the big jump in lodging away from home prices in October.   
  • Food at home inflation is finally starting to ease, though prices are 12.4% higher than a year ago.  But in October, food at home prices rose just 0.4% in line with the increase in the overall CPI during the month. Unfortunately, October saw another big jump in the prices of food away from home which were up 0.9% in the month, the same increase as in September.