Inflation Trends and the RCF Inflation Scorecard – October 2023

October CPI a Treat, but is it also a Trick?

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

The Current Situation

Consumer prices barely rose in October (rounded to 0.0% change), lowering year-over-year inflation to 3.2% from the prior month’s 3.7% rate.  Core prices rose just 0.2% in October, reducing its yearly inflation rate to 4.0%, the lowest in over two years.  Still, we’ve seen inflation drop temporarily (3.0% in June) only to jump up again in later months.  So, is October’s good news a treat or a trick?

We think the lower inflation in October is a sign of things to come based on analysis of our RCF Scorecard, discussed later, and a review of recent monthly changes in core prices.  Three of the past five months have seen core prices rise just 0.2%, something that didn’t happen a single time in the previous 19 months.  Over the past six months, core inflation is 3.2% (annualized), down from a 4.8% annualized rate in the six prior months and a 6.2% rate in the six months prior to that.  Not only is the core inflation rate falling, but it is falling more quickly than the year-over-year data suggest. 

Core inflation matters because it is less impacted by one-off events like big changes in monthly gasoline prices.  But let’s not dismiss the long-term improvement in the overall inflation rate which is well-down from its 9.1% peak last summer.  We’re not quite at the Fed’s 2.0% inflation goal but current trends point to reaching it in late summer or early autumn of 2024. 

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. 

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. 

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 scorecard metrics for October were improved from last month’s readings.  Only 22.9% of the weighted CPI had rising inflation in October vs. September while a nearly equal percentage (22.5%) of the CPI saw prices fall during the month (deflation).  Our second metric shows that 60.8% of the weighted CPI had monthly inflation above 0.2%, a small decline from Septembers 62.3% share.  Thus, our first metric shows that a key reason why inflation declined is because several components of the CPI saw an absolute drop in prices in October.  But our second metric shows that for the categories experiencing price increases, most are above the 0.2% monthly rate implied by the Fed’s target inflation rate of 2% per year. 

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


  • Motor fuels prices fell 4.9% in October, but they weren’t the only line item to experience deflation during the month.  Prices for lodging away-from-home, household furnishings, new and used vehicles, and education/communication services all fell.  That deflation was found across such a diverse set of categories indicates that downward price pressures are becoming more widespread.
  • Food-at-home prices rose 0.3% in October, higher than the 0.1% increase in September.  But compared to a year ago, food-at-home inflation has been an acceptable 2.1%.
  • Rent prices rose 0.5% in October, same as September, but owner’s equivalent rent inflation declined.  Nevertheless, both measures of shelter costs are up around 7% vs. a year ago and continue to be the main drivers of inflation in the U.S. economy.
  • More recently, motor vehicle insurance prices have been soaring – up 1.9% in October following a 1.3% rise in September and a total increase of 19.2% compared to last year.
  • Although 0.2% monthly inflation is viewed as the standard for a low-inflation economy, it is important to also look for evidence of a high-inflation (0.5% monthly) economy.  In October, just 3 of our 20 CPI categories had monthly inflation of 0.5% or more; in September, 9 categories were members of the high-inflation economy. 
  • Wages continue to rise faster than prices, both in October and year-over-year.  That’s key because lower inflation needs to be coupled with still solid wage growth to improve bottom line finances.