Inflation looks to be in warp overdrive judging by the worrying commentary by corporate chieftains this earnings season.
Mentions of inflation on first quarter corporate earnings calls have exploded 800% year-over-year, according to new research from Bank of America Securities strategist Savita Subramanian. By sector, inflation was most prevalent in materials, consumer and industrial companies. Most sectors have cited inflation more than the historical norm, Subramanian notes.
Some of the biggest jumps in inflation mention were tied to transportation, materials and labor outlays.
So far, inflation hasn't crushed the bottom lines of companies as the world economies are roaring back and demand is strong for goods and services. "Higher mentions of pricing, coupled with a record net margin, suggest inflation so far has been positive for corporate earnings," Subramanian says.
Out of the 303 companies from the S&P 500 that have reported, earnings growth is tracking up 41% BofA's data shows.
BofA's data highlights a serious pickup in inflation being felt throughout corporate America, which could pressure profits later this year as economic growth cools.
"We are seeing substantial inflation," Berkshire Hathaway CEO Warren Buffett said at the Berkshire Hathaway annual shareholder meeting exclusively live-streamed by Yahoo Finance. "We are raising prices. People are raising prices to us, and it's being accepted."
Buffett called out much higher steel costs impacting Berkshire's housing and furniture businesses.
"People have money in their pocket, and they pay higher prices... it's almost a buying frenzy," Buffett said, noting that the economy is "red hot."
Higher prices for consumers
After a strong first quarter, mattress giant Tempur Sealy said it was forced to impose a price increase on April 1 because of higher chemical costs.
"Clearly we are dealing with inflation like all manufacturers. Our business model is when we have input cost increases we pass them on to the end consumer," Tempur Sealy Chairman and CEO Scott Thompson said on Yahoo Finance Live. "We had a large price increase in the fourth quarter of last year, and had another price increase on April 1."
Proctor & Gamble recently said it would begin to hike prices on baby care, feminine care and adult incontinence products in the United States. Price increases will range from mid- to high-single digit percentages. The hikes will go into effect in mid-September.
Whirlpool CFO Jim Peters recently told Yahoo Finance Live the appliance maker just jacked up prices by 5% to 12% to counteract rising steel costs.
Kleenex maker Kimberly-Clark said it will increase prices in the U.S. and Canada on the majority of its consumer products due to "significant" commodity cost inflation. The percentage increases will range from mid- to high-single digits and go into effect in June.
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