Inflation Trends and the RCF Inflation Scorecard – September 2023

Inflation Holds Steady, Remains Too High

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

The Current Situation

Consumer prices rose 0.4% in September leaving the year-over-year inflation rate unchanged at 3.7%.  Core CPI rose 0.3% in September lowering its year-over-year increase to 4.1% vs. last month’s 4.3% rate.  The September report was a case of no news is bad news in that mostly steady inflation reinforces the idea that the big victories in the inflation fight have already been achieved.  In contrast, it looks like lowering inflation from 4% to 2% is likely to take longer than hoped.

Some good news comes from producer prices which were up just 2.2% year-over-year in September. Though producer price inflation is higher than it was a few months ago, the PPI data suggest that the Fed’s 2% target for consumer prices is achievable without pushing the economy into a recession. 

The risk now is that the longer that inflation remains above 2%, the more that people will expect inflation to remain above 2%.  Indeed, the recent University of Michigan survey found that consumers expect 3.5% inflation over the next year.  An analysis of interest rates by the Cleveland Federal Reserve put the implied market inflation expectation at 2.8%.  Inflationary expectations can be self-fulfilling and make it even more difficult to reduce inflation in the future. It will likely require more tangible improvement in the next few months to change people’s inflation outlook.  

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 index. 

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.   

Although headline inflation remained unchanged in September, our metrics show a worsening underlying situation.  Just 5% of the weighted CPI showed deflation and only 18% showed slowing inflation, the worst numbers for both measures in over a year.  Half of the weighted CPI index showed rising inflation, the highest share since last December.  Our second metric was no better as 62% of the weighted CPI had a monthly inflation rate above 0.2% in September.  That was the highest share of above-target inflation since February.  Therefore, unlike last month’s inflation jump which was due mostly to a large increase in fuel prices, September’s increase was more widespread, as noted by the yellow line and red bar in our scorecard.

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


  • Food-at-home prices rose just 0.1% in September and are up only 2.2% from a year ago.  Food-away-from-home continues to see higher inflation: 0.4% in September and 6.0% vs. a year ago.
  • Used car and truck prices fell again in September, the fourth consecutive month with a price decline.  Prices are down 8% vs. year ago but are still much higher than before the pandemic.  New vehicle price inflation was stable in September, with prices up a modest 2.5% compared to last year. 
  • The long-awaited slowdown in rent inflation hasn’t yet occurred.  Rents were up 0.5% in September, the same increase as in August.  Owner’s equivalent rent – the single largest component in the CPI index – increased 0.6% in September, higher than the 0.4% increase in August.  Both shelter cost measures are up more than 7% compared to a year ago.  
  • Even where there were improvements in the September data vs. August, they often come with a caveat.  For example, motor fuel prices rose less in September than in August but were still up 2.2% during the month.  Motor vehicle insurance and vehicle maintenance/repair price inflation were also lower in September than in August, but both are up more than 10% year-over-year.
  • Medical care has been a surprising contributor to lower inflation.  Prices were up 0.2% in September and are down 1.4% vs. last year.