Inflation Talk Dominates Earnings Season So Far

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In a sign noticeably higher consumer prices may be just a few months away, inflation has emerged as one of the most discussed topics so far this corporate earnings season, according to Bank of America analysts. 

Among the 26 S&P 500 companies that had mentioned “inflation” on their earnings call with company executives as of Friday, the average number of mentions more than quadrupled from the year-ago period—the largest increase since at least 2004, data supplied by the analysts shows. Historically, the Consumer Price Index (CPI) has moved in tandem with the number of inflation mentions, lagging by three months or so, they said in an accompanying research report released Monday. 

This “points to a robust rebound in inflation ahead,” BofA said in the report, citing Whirlpool, Chipotle, and Tractor Supply Co. among the companies with inflation mentions.

As the cost of raw materials, transportation, and labor increases, some companies have already raised their prices, and more are expected to do so soon. Kimberly-Clark, the maker of Scott toilet paper and Huggies diapers, will boost the majority of its consumer product prices by mid-to-high single digits in North America starting in late June. Cereal giant General Mills said it’s considering price increases this quarter. 

The Federal Reserve has repeatedly said it expects inflation to increase and even move above its 2% target for a short time as supply bottlenecks established during the pandemic work themselves out.