Wells Fargo: Strong CPI Print, More To Come

Wells Fargo don't see inflation resembling "anything close to the Fed's goal until 2023" as supply chains remain disrupted and service prices trend higher.

• They note "the breadth of price hikes continues to widen well beyond the industries most affected by the pandemic".
• Energy, food and car prices jumped higher but there were also solid increases in household furnishings, medicinal drugs, sporting goods and tobacco.
• Inflation is expected to move even higher over the next few months and remain above 6% Y/Y through 1Q2022 after which base effects start to take hold.
• In a sign of inflation widening beyond just goods in short supply, they see health insurance prices adding 0.4pps to headline CPI Y/Y inflation over the next twelve months from their current contribution.