Wells Fargo: March Marks The Peak In Post-COVID Inflation

Wells Fargo expects March's inflation report to mark "the peak in post-COVID inflation" (though they still expect the Fed to "expedite tightening" with 50bp hikes in both May and June).

• They note that "energy was not the only source of pain for households" in the March CPI report, with food at home prices up 10% Y/Y (the highest increase in grocery prices in 41 years).
• But "underneath the surface there are signs that pandemic-related inflation is beginning to ease", including a sharp fall in core goods inflation.
• Although core services gathered steam, "this rotation away from goods and toward services inflation has been long anticipated, and although widening lockdowns in China are a risk to this transition, today's data are an encouraging sign that goods inflation is finally rolling over."