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Inflation is soaring amidst the buying frenzy. Why’s that?

Inflation is rising at an alarming speed lately. Corporate chieftains have been expressing concerns about its rate during this earnings season.

According to Bank of America Securities strategist Savita Subramanian’s new research, mentions of inflation on first-quarter corporate earnings calls have skyrocketed 800% year-over-year. Furthermore, inflation was most prevalent in sectors representing consumer, materials, and industrial companies. Most sectors have already cited inflation more than the historical norm.

Besides, some of the biggest hikes in inflation mention were tied to materials, transportation, and labor outlays. Still, inflation hasn’t crushed the bottom lines of companies thus far, with the world economies recovering from the coronavirus pandemic crisis and strengthening demand for goods and services.

Subramanian noted that higher mentions of a record net margin and pricing suggest inflation has been positive for corporate earnings thus far.

BofA’s data highlighted a significant pickup in inflation, stating that it was obvious throughout corporate America. Berkshire Hathaway CEO Warren Buffett also noted that we see substantial inflation. Companies are raising prices. People are also raising prices to them, and they accept it. Buffett added that much higher steel costs are impacting Berkshire’s housing and furniture businesses. He said that people have more money in their pocket, and they pay higher prices.

The companies say they had to increase prices

Mattress giant Tempur Sealy stated that it was forced to impose a price increase on April 1 due to higher chemical costs.

Tempur Sealy Chairman and CEO Scott Thompson said that they are dealing with inflation like all manufacturers. According to their business model, when they have input cost increases, they pass them on to the end consumer. The company had a large price increase in the fourth quarter of 2020 and had another price increase on April 1.

Proctor & Gamble also noted recently that it would begin to increase prices on baby care, adult incontinence, and feminine care products in the United States. The increase will go into effect in mid-September.

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