When I first encountered wolves I remember waving my torch at them to try and scare them off. I ended up dying, but it should be a feature to be able to scare wolves at least with a lit road flare, torch, lit broom, and maybe shotgun and rifle shots as those are very loud and should scare them away, for a little while at least, giving you a chance to escape because right now if you encounter wolves and don't have any way to defend yourself or drive the wolves away it is guaranteed death, at least a bear attacks you once and leaves.
Just holding the fire-lit item shouldn't be enough, you would need to do some light attacks toward the wolves to wave the item in order to scare them away for a while. And in order to scare them with the gunshots you would need to just make noise but shooting at them will scare them faster.