US: Any softening in the overall pace of inflation remains a ways off – Wells Fargo

Data released on Wednesday showed the annual inflation rate in the US in October reached the highest level since 1990.  The breadth of price hikes continues to widen well beyond the industries most affected by the pandemic, according to analysts at Wells Fargo. They expect inflation to push even higher over the next few months, before starting to subside around the second quarter of next year.

Key Quotes: 

“The onslaught of inflation continued in October, with the Consumer Price Index rising a hotter-than-expected 0.9%.Over the past year, inflation has risen 6.2%, which surpasses the 2008 peak and is the strongest one-year increase in prices since 1990. The breadth of price increases cannot be ignored and suggests any softening in the overall pace of inflation remains a ways off.”

“Goods inflation has been the primary contributor to the historically high inflation experienced this year. Goods inflation showed no signs of easing in October, with prices for goods excluding food and energy rising 1.0% in the month.”

“We expect to see the run of strong monthly prints to continue over the near term. More businesses than ever plan to raise prices, according to records dating back to 1973.”

“A return to levels consistent with the Fed's goal is unlikely be a story for 2022. Along with fairly resilient consumer demand and a tight labor market that looks set to keep the heat turned up on wages, inflation seems here to stay for quite a while.”