Inflation Trends and the RCF Inflation Scorecard – September 2022

Little Effect of Interest Rate Hikes on Prices Yet

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

The Current Situation

The year-on-year inflation rate for September was unchanged from August, even while the month-on-month is more than twice the Federal Reserve benchmark.  The bad news is that core prices (excluding food and energy) rose 0.6% in the month and are up 6.7% from a year ago, higher than the peak core inflation rate of 6.4% in March.  Aside from a welcome continuing drop in fuel prices (down 4.8% in September vs. August) inflation is showing no signs of abating despite the Federal Reserve’s numerous interest rate hikes.

Effects of higher interest rates may be seen in the lower rate of increase in new vehicle prices and in the falling index for used vehicles. While Fed rate increases have slowed the rate of increase in housing sale prices (indeed the July S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index shows a decline in house prices for the first time since 2012) this has yet to be reflected in the inflation rate for rents or the imputed cost of owner-occupied housing.  Beyond these components, the Fed’s interest rate increases are yet to have widespread impacts across consumer spending and the rates of price increases. Some mixed news comes from the Producer Price index data for September.  Overall PPI rose 0.4% in the month after a decrease of 0.1% from July to August. However, core PPI was unchanged.  But the year-over-year inflation rates for these two measures were 8.5% and 7.5%, the overall index higher than its consumer price counterpart but the core index a full percentage point lower. 

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.   

In September, 45% of the weighted CPI components recorded higher monthly inflation than they did in August.  In August, 65% of the CPI components saw rising monthly inflation.  Thus, for most of the CPI categories, inflation is stable or getting better, not worse, but those improvements are very modest, as 73% of the CPI recorded monthly inflation above the Federal Reserve’s target of 0.2% per month, down just one percentage point from August.  Nonetheless, that figure is the lowest share since September of 2021, providing at least a glimmer of hope on the inflation front.

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


  • Housing costs were up 0.8% in September and were up 0.7% in August.  They represent 42% of the core CPI index and are the biggest driver of higher core inflation during the month.  Recent falls in the index for house prices are not yet showing in the CPI.
  • Motor Fuel prices have been falling for the last three months but are still up 19% year-on-year.
  • Commodity cost inflation such as for food, apparel, furnishings, cars and trucks, and energy commodities is stable or falling.  Month-on-month, the aggregated Commodity index has been falling for the last three months.
  • Service cost inflation such as for housing, transportation, utilities, and medical care is rising. 
  • Public Transport is up 27% year-on-year, but is up only 9% since pre-pandemic 2019.