Corporate earnings from multinational food consumer packaged goods (CPG) companies this past week were upbeat, with most results beating or exceeding analyst expectations. However, a key benchmark of inflation released Friday by the Fed showed consumer prices up 3.5 percent in the most recent month, the highest rate of growth in almost 30 years.
This news suggests that the Fed will be more likely to taper asset purchases and that higher interest rates are more possible as we reach late 2021 and into 2022. Nestle USA CEO Steven Presley referenced both transitory and permanent inflationary pressures as creating headwinds for corporate profits in a recent interview. Presley highlighted transportation costs, with elevated ocean freight and U.S. trucking freight costs that could be longer lasting.
The world’s largest food company reported organic growth in sales of 8.1 percent in H1 2021 and higher revised expectations for the second half of the year.
Consumer Price Index (urban), monthly change, 12-month moving average
Source: FRED, McKeany-Flavell
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