Wednesday will provide another official government reading on consumer price inflation. On the production side of the economy, corporate CEOs seem to be talking about little else. In the midst of a stellar season for quarterly earnings reports, executives can’t stop discussing the price surges that the Federal Reserve keeps telling us are “transitory.” Transitory or not, Bank of America says that mentions of inflation on corporate earnings calls are setting a new record.
BofA’s Savita Subramanian tells clients this week that such mentions are up an astounding 900% compared with last year and observes that “we are starting to see the good inflation environment turning into a bad inflation environment with many companies citing accelerating cost inflation, particularly around wages.” She notes the chatter in particular industries:
By sector, Materials and Staples saw the most inflation mentions, while labor inflation mentions were most cited in Consumer Discretionary and Industrials (the two most labor intensive sectors in the S&P 500).
Speaking of producers of consumer staples, Jaewon Kang reports today for Dow Jones Newswires:
Sysco says inflation is becoming a bigger factor and the company expects it to continue into the first half of the new fiscal year. CFO Aaron Alt says the distributor anticipates continued inflation in poultry, beef and paper categories, adding that Sysco can pass along increases necessary to protect its dollar-per-case profit.
No doubt many companies will try to pass along price increases on the goods they buy to their customers. But companies won’t all succeed, which has securities analysts concerned about future profit margins.
And it’s not just getting more expensive to buy goods. It’s also getting more expensive to hire people in a tight labor market. Also on Dow Jones Newswires, Matt Grossman reports:
Read More: More Inflation Warnings – WSJ