Looking for Winners and Losers of Inflation

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Inflation reports from the government today and tomorrow will be closely watched as economists and investors try to forecast the direction of interest rates.

Producer prices are due at 8:30 a.m. ET, followed by consumer prices at the same time on Thursday. Regardless of how the official numbers play out, companies have provided some anecdotal information about prices. Now that earnings season is winding down we wanted to review some of those.

Restaurants may be most noticeable. McDonald’s (MCD) and Chipotle Mexican Grill (CMG) both managed to goose sales by hiking their menu prices. Ditto for Fiesta Restaurant (FRGI), a much smaller rival whose brands include Pollo Tropical and Taco Cabana.

Kraft Heinz (KHC) also managed to charge customers more, but other packaged-food companies like snacks giant Mondelez (MDLZ) found itself on the wrong end of the rising-price tide.

Transports have fared better. United Parcel Service (UPS) boasted to investors of “higher base-rate pricing” and “fuel surcharges” in its April 26 earnings report. American Airlines (AAL) and Delta Air Lines (DAL) also reported higher fares.

But those same inflationary trends squeezed flooring manufacturer Mohawk Industries (MHK). Other providers of building products like Masco (MAS), Owens Corning (OC) and Sherwin Williams (SHW) also complained about rising materials prices. Investors punished all four.

Looking back to March, the one-two punch of costlier shipping and commodities hammered Cheerios maker General Mills (GIS). Then you also had rising wages at retailers like Ross Stores (ROST) and Target (TGT).

While most of these cases point to higher prices and inflationary pressure, that hasn’t been true across the board. One issue seems to be a glut of inventories as traditional brick-and-mortar stores go dark. Just look at Procter & Gamble (PG), Unilever (UN) and tape maker 3M (MMM).

Another victim of falling prices was Cardinal Health (CAH), which cratered to a new 52-week low after being forced to charge less for generic drugs. And speaking of medicines, don’t forget the White House said last week it will soon announce new steps to push down prescription-drug prices.

In conclusion, everyone’s watching inflation these days. But it’s also worth keeping an eye on which companies are winners and losers as prices change.

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