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Elevated Energy Prices May Persist Through 2026; Could Benefit Utilities, Industrials, WFII Says

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Elevated energy prices are expected to persist through most of 2026, supporting higher gasoline, airfare and grocery costs, Wells Fargo Investment Institute strategists said in a Wednesday note.

"We expect energy prices to stay above their pre-war levels for most of the balance of 2026, and that likely affects gasoline, airfare, and grocery prices," strategists said, adding that despite this, inflation news "isn't all that bad."

The firm said April headline consumer price index inflation accelerated to 3.8% over the year from 2.4% in February, while producer price index inflation jumped 6%, the highest level since 2022.

Rising import prices and higher transportation costs continue to pressure energy-linked sectors as airfares and industrial input costs rise, according to the note.

Analysts said higher energy prices may create investment opportunities in industrial gases and specialty chemicals companies that can pass rising costs through to business customers.

The firm also favored utilities and industrial companies tied to the growth of artificial intelligence infrastructure, including machinery and electrical equipment manufacturers supporting data-center expansion.

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