Wells Fargo: Delta May Have Kept A Lid On Services CPI

Wells Fargo forecasts rises of 0.4% M/M in headline CPI and 0.3% in core in the September report.

• They write: "While prices for used vehicles and travel services saw outright declines in August, prices for other items, namely food, energy, housing and other goods picked up the slack, suggesting that inflation may be coming off the boil, but is still quite hot."
• For September's core measure, "travel and other services appear unlikely to add meaningfully to price pressures" given cooler demand for in-person services amid the Delta Covid wave.
• They don't see the Manheim used vehicle price index's uptick as filtering into September's CPI, but ", it represents the potential for continued supply-chain dislocations to keep a solid floor on the pace of inflation."
• They think we could see core goods inflation pressures "until value-chain pressures ease".
• They also see housing as likely to continue to boost inflation as the index "picks up recent home price gains, and as rents continue to pick up as people move back to urban centers hit hard by COVID."