Inflation is transitory according to the Fed. Powell and company tell us it is supply constraints that are boosting prices. While this may be true to some extent, excess demand from trillions being dumped on consumers by governments and pumped into the financial system by central banks is also having an impact and potentially a more lasting impact.

The WSJ reports today that Taiwan Semiconductor is raising prices on its most basic chips by up to 20% and 10% for its more advanced chips. Taiwan semi is the world’s largest chip maker. You can be sure others will follow suit. With demand as strong as it is today, it is unlikely that these price increases won’t make it into consumer prices.

Inflation is the economic indicator to watch over the next 6-12 months. A lasting change in inflation dynamics would have a profound impact on the pricing of all financial assets.

Below is more on Taiwan semi from the WSJ. You can read the full story here.

The world’s largest contract chip maker is raising prices by as much as 20%, according to people familiar with the matter, a move that could result in consumers paying more for electronics.

Taiwan Semiconductor Manufacturing Co. TSM +0.61%plans to increase the prices of its most advanced chips by roughly 10%, while less advanced chips used by customers like auto makers will cost about 20% more, these people said. The higher prices will generally take effect late this year or next year, the people said.