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Finance chiefs are already worried about inflation. Wednesday's consumer-price figures likely validated their fears.
Consumer prices rose at the fastest pace in three years in May, as the Iran war pushed energy prices higher. Beyond the gas pump, though, there were fewer signs of quickly rising prices.
Inflationary pressures was also a topic of discussion at our CEO Council Summit in London this week. ABN Amro CEO Marguerite Bérard noted during an interview that inflation is “worrisome,” which has been a theme for CFOs on recent earnings calls. For business leaders, it’s also worth noting that Bérard said corporate chiefs must constantly adapt to a world where geopolitical and economic shocks constantly disrupt scenario planning.
A look at the latest CPI data: Consumer prices were up 4.2% in May from a year earlier, the Labor Department said Wednesday, accelerating from 3.8% the previous month. That was the highest year-over-year reading since April 2023 and a sign that high energy costs stemming from the conflict with Iran are continuing to push up price pressures.
Academy Sports & Outdoors’ CFO Carl Ford specifically addressed inflationary pressures during the company's earnings call this week, saying: "The consumer environment remains pressured as high gas prices largely offset the benefit of tax refunds in the first quarter, particularly for lower-income households, which continues to weigh on discretionary spending."
He further noted that the inflationary pressures are causing consumers to seek out bargains, saying: "At the same time, we continue to see higher-income consumers, which are our largest and fastest-growing cohort, trade into Academy in search of value."
J.M. Smucker CFO Tucker Marshall said that he expects low single-digit inflation for most of the company’s portfolio, excluding coffee and tariffs.
He noted that the company will monitor any additional cost due to inflation: "The primary driver of this is the geopolitical tensions in the Middle East,” which he noted will have an implication on “the cost outlook and how we manage over time."
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