US inflation fears return as corporate America counts the cost

MENTIONS of inflation on S&P 500 earnings calls have reached the highest level in more than two years, underscoring growing concerns over skyrocketing costs and weakening US consumer confidence.

From paint makers to spice manufacturers, company bosses have been evaluating the impact of rising prices, coming up with ways to alleviate the pressure and reassure investors worried about the impact on margins.

The latest data on US personal income and spending “paints a troubling picture of the US consumer,” Bloomberg Economics analysts Troy Durie and Anna Wong said, with inflation coming in hotter while income growth fails to keep pace.

Soaring oil prices, which have resulted in blowout results for energy majors, have pushed up the price of fuel, fertiliser, plastic resin and other key raw materials – making it more expensive to fly planes and package goods. 

Against this backdrop, mentions of “inflation” or “inflationary” climbed to 820 on the earnings calls of S&P 500 companies in October, the highest monthly figure since February 2024. 

Industrial companies represented a quarter of all references, as high energy and logistics costs weighed on the sector.

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Heating, ventilation, and air conditioning manufacturer Lennox International recorded the highest number of mentions, with chief executive officer Alok Maskara warning the company expects “inflationary pressures to continue, particularly from tariffs, components, and commodities”.

The materials sector has been similarly affected, as prices for oil derivatives continue to climb.

Paint-maker PPG Industries detailed its plans to mitigate the pressure through price increases, though it was careful not to overstate the benefits. 

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“I would certainly not assume price inflation to be a tailwind in the short term because we’ve still got some work to do,” CEO Timothy M Knavish said, with chief financial officer Jamie A Beggs adding that raw materials costs were still on the rise. 

Consumer companies have not been spared. General Motors, the maker of Cadillacs and Chevrolets, expects a US$2 billion headwind in 2026 from higher commodity, logistics and memory prices, after inflation added around US$400 million in incremental costs in 2026. 

Spice manufacturer McCormick & Co is battling elevated freight costs and subdued spending. “As we go into ’27, we still have a lot that we have to sort out right now in terms of inflation and costs, and where the consumer is going to be,” CEO Brendan M Foley said on the earnings call. 

Even sectors that are typically better insulated, like banks, are increasingly bringing it up. “Inflation and higher interest rates continue to be headwinds, and the longer they persist, the more pressure they can place on both consumers and commercial clients,” Wells Fargo CEO Charles W Scharf said on an analyst call.

With the cost of living a central theme of the US midterm elections, both investors and companies will continue to discuss soaring prices as the rest of the earnings season unfolds. Just a week into the month, mentions of inflation are already far ahead of last November’s total count. BLOOMBERG