In their Q1 2021 earnings calls, Ball Corp., General Motors Co., The Clorox Co., and Kimberly-Clark Corp. all mentioned or addressed inflation concerns. Data provided by Bloomberg reveals that S&P 500 companies have discussed or mentioned inflationary pressures more times in the first quarter of 2021 than any quarter since Q2 2019. Presently, inflation has been cited 785 times during first-quarter earnings presentations compared to 730 times in the second quarter of 2019. Leading the discussion surrounding inflationary pressures are the industrials, consumer staples, and consumer discretionary sectors with discussions including increased freight and transportation costs as well as a material increase in the price of pulp. Some corporate names expect to pass these increased costs to the consumer with Kimberly-Clark and Procter & Gamble planning price increases on their consumer tissue products starting in June and September, respectively. However, some companies like Ball recognize not all of these costs will not be passed to the consumer, potentially impacting margins down the road.

Discussions surrounding inflation also appear to be drawing attention from investors. Questions about whether inflation may increase faster than once thought are being discussed after the $1.9 trillion American Rescue Plan was passed earlier this year. Additional long-term economic packages proposed by the Biden Administration to the tune of approximately $4.1 trillion between the American Jobs Plan ($2.3 trillion) and the American Families Plan ($1.8 trillion) have drawn concerns that the U.S. economy is possibly overheating from the massive proposed stimulus. The inflation narrative also drives the question of when the Fed may alter its views regarding raising interest rates. Treasury Secretary Janet Yellen was quoted in the Atlantic last week saying that “it may be that interest rates will have to rise somewhat to make sure our economy does not overheat, even though the additional spending is relatively small relative to the size of the economy.” Treasury Secretary Yellen then said on Tuesday that she doesn’t “think there’s going to be an inflationary problem, but if there is, the Fed can be counted on to address them.” Markets will continue to monitor discussions surrounding inflation when CPI figures are released later this week.