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Inflation Prediction for October - CPI stable in the 3.5 - 4% range through year-end

September 2023 data release October 12, 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 by year-end. It is all about the lag timing ....

- Jeff Hulett


INFLATION: September 2023 as reported 10.12.23 annual no change, remained at 3.7%

Predicted vs Actual and a forward look. On 9.13.23 the Sept 2023’s monthly CPI was 0.4% which is equal to the Sept 2022, thus no change in annual CPI. Monthly CPI was projected to be 0.3%.

Shelter came in at twice the level that has occurred in recent prior months.


Total CPI: Projection was very close to Actual.


INFLATION Projection Sept: Sept 2023 to be reported 10.12.23 Total CPI will decrease slightly from 3.7% to 3.6% as the Sett 2022 0.4% drops off. Energy prices will be UP as the negative Sept 2022 1.7% drops off.


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 Sept 2022’s 0.4% drops off and was replaced by Sept 2023 0.4%. Since they were equal, the result was no change in the annual CPI of 3.7%.


FOOD: Continues to improve as older monthly tall bars fall off..


ENERGY: Annual will continue to increase as older negative bars fall and this assumes no increases.


Core CPI: Core represents 77% of all CPI. Of this shelter is the largest component representing 32% of all consumer expenditures. Core improved in Sept as the older bar fell off. There is only one more older tall bar to fall off. Improvement to core will slow once the Oct data is reported on Nov 14.


SHELTER: Core Shelter comprises nearly a third of the CPI. It should continue to improve as the older tall blue bars fall off. The Sept 2023 increase appears to be a one-off event.


MEDICAL SERVICES: Core Sept 2022 was the last tall bar. Decreases in Medical Service prices have been a major contributor to the overall CPI improvement but that is going to stop in October as the negative totals from 2022 start dropping off.


NEW CARS: The slowdown in new car prices continues to help the overall CPI improvement. It has 3 more months to run as the older tall bars fall off. The very tall green spikes are a thing of the past. Given the labor strike in this sector continues, it’s impact on prices remains to be seen.


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


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