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Inflation Prediction for November - CPI stable in the 3.2 - 3.8% range through year-end

October 2023 data release November 14, 2023

Editors note: TCV Economist Bill Knudson's inflation forecasts have been on target over recent history. He brings 30+ years of experience and an intuitive approach that works.

Watch mortgage rates. The CPI forecast suggests downward mortgage rate pressure. For those who took out mortgages in the last 2 years, you may have a refi opportunity before Q2 2024. It is all about the lag timing ....

- Jeff Hulett


INFLATION: October 2023 as reported on 11.14.23 annual decreased from 3.7% to 3.2%

Oct 2023 ’s monthly CPI was 0.0% and replaced the Oct 2022 monthly 0.5%

Monthly CPI was projected to be 0.3%.


Total CPI: When Oct 2022 0.5% fell off, it was projected to be replaced with Oct 2023 0.3% which would have caused the annual CPI to decrease from 3.7% to 3.5%. When Oct 2023 monthly came in at 0.0% the actual annual came in at 3.2%. The Oct 2023 monthly 0.0% will remain in the CPI and will help keep the annual CPI calc down for the next 11 months into the future.


INFLATION Projection Oct: Oct 2023 data was released on 11.14.23 and annual CPI decreased from 3.7% to 3.2%. The leading causes of this change were energy reduction and used car prices. A slowdown in shelter prices was a major contributor.


Total CPI: The annual CPI is a rolling product of 12 monthly data points. Think it as being 12 dominoes, as a new one comes on, the oldest one falls off---the next one is Oct 2022’s 0.5% drops off and was replaced by Oct 2023 0.0%. This caused the annual CPI to decrease from 3.7% to 3.2%.


FOOD: Continues to improve as older monthly tall bars from late 2022 fall off. November 2023 will see further improvements.


ENERGY: For October, the Oct 2022 was 1.7% and it was replaced by a negative 2.5%. This is a one-time event that lowered the overall Oct 2023 CPI monthly total. This will likely not occur over the next two months since the Nov and Dec 2022 monthly totals are negative numbers and will fall out.


Core CPI: Core represents 77% of all CPI. Of this shelter is the largest component representing 32% of all consumer expenditures. Core improved in Oct as the older bar fell off. Improvement to core will slow as the Nov and Dec 2022 months are about the average of 0.3%


SHELTER: Core Shelter comprises nearly a third of the CPI. It should continue to improve as the older tall blue bars fall off, especially for the upcoming month of November.


MEDICAL SERVICES: Oct 2022 was the last tall positive bar. Decreases in Medical Service prices have been a major contributor to the overall CPI improvement but that is going to stop in November as the negative totals from late 2022 start dropping off and annual Med CPI will rapidly increase.


NEW CARS: The slowdown in new car prices continues to help the overall CPI improvement. It has 2 more months to run as the older tall bars fall off. The very tall green spikes are a thing of the past.


USED CARS: The improvement to overall CPI due to used car price decreases will slow as the negative older months start falling off in November and December.


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