US October CPI unlikely to offer much of a reprieve on the inflation front – Wells Fargo

On Tuesday, the Producer Price Index for October is due in the US and on Wednesday the Consumer Price Index. According to analysts at Wells Fargo, the numbers on Wednesday, are unlikely to offer much of a reprieve on the inflation front.

Key Quotes: 

“Consumer Price Index report for the month of October is unlikely to offer much of a reprieve on the inflation front. Our forecast is for a 0.6% month-over-month increase on the headline index and a monthly increase of 0.4% on the core index. If realized, this would put headline CPI inflation at 5.9% year-over-year and core CPI inflation a bit lower at 4.4% year-over-year.”

“A key question for the inflation outlook is the extent to which some price growth in certain sectors coming back down to Earth, such as new and used vehicles, will offset a broadening out of inflation in other areas, such as housing.”

“Goods inflation has been running at rates not seen in decades, while services inflation has mostly been in line with its historical average. We expect goods inflation to hand the baton to services over the course of the next year, but all signs indicate that supply chain bottlenecks will keep fanning the flames on inflation in the near term.”