Inflation fears from Corporate America are falling fast

Brian Sozzi

The CEO of Berkshire Hathaway-owned (BRK-A, BRK-B) See's Candies is finally seeing some relief on the prices that help bring the brand's storied chocolate to market.

"Sugar has more than doubled [in price]. Sugar is more expensive in the United States of America than any other place on the planet. It's a price-controlled kind of a scheme. Butter is up over 100% in the last year," explained See's Candies CEO Pat Egan on Yahoo! Finance Live (video above). "I believe that we're actually, I hope, at the peak of that."

Egan isn't alone in the C-suite community in breathing a sigh of relief on inflation after a brutal two-year stretch.

Of all the S&P 500 companies that reported first quarter earnings from March 15 to May 11, new FactSet research found that 278 called out "inflation" on their earnings calls. While this is above the five-year average of 211, the number is the lowest among S&P 500 companies going back to the second quarter of 2021.

It also represents the third consecutive quarter in which the number of S&P 500 companies citing the term "inflation" has declined on a quarter-over-quarter basis.

By sector, financials and industrials boast the highest number of companies citing inflation on earnings calls for the first quarter. The fewest number of inflation mentions have come from communication services and utilities.

While top execs may be feeling better about the inflation outlook, mixed reads on prices of late still have Wall Street worried.

Execs breathe a sigh of relief on inflation.
Execs breathe a sigh of relief on inflation. (FactSet)

April's Consumer Price Index (CPI) increased 4.9% year over year, the lowest level since April 2021, as prices for food cooled. The headline increased represented a steep deceleration from the 9.1% peak hit last June.

But prices continued to hold above the Federal Reserve's 2% inflation goal.

And "super core" inflation — which strips out food, energy and shelter —saw a 0.4% increase in April. That was a faster pace than the 0.3% increase in the measure in March.

Meanwhile, the Producer Price Index (PPI) for April showed a year over year increase of 2.3%. Similar to the CPI, it was the slowest annual increase since 2021.

The mixed reads have ignited concerns that the Fed could stay the course with interest rate hikes, surprising a stock market positioned for a pause.

"Inflation's been higher than we want it, but let's try to stabilize the prices without generating any unnecessary recession," Chicago Fed President Austan Goolsbee told Yahoo Finance's Jennifer Schonberger.

IMAGE DISTRIBUTED FOR SEE'S - Berkshire Hathaway's Warren Buffett tries to lift a replica of a giant See's Candies lollypop, Saturday, May 3, 2014, at the Berkshire Hathaway Annual Shareholder's Meeting, in Omaha, Neb. (Photo by Dave Weaver/Invision for See's/AP Images)
IMAGE DISTRIBUTED FOR SEE'S - Berkshire Hathaway's Warren Buffett tries to lift a replica of a giant See's Candies lollypop, Saturday, May 3, 2014, at the Berkshire Hathaway Annual Shareholder's Meeting, in Omaha, Neb. (Photo by Dave Weaver/Invision for See's/AP Images) (Invision for See's)

See's Candies CEO Egan has been forced to raise prices on consumers during the inflationary outburst.

"Certainly we've raised prices. Every business has to. We have to cover our costs. And our ingredients cost, as an example, have gone up 30% year over year. So we have to make sure that we're covering that and labor costs," Egan said.

But with inflation moderating, maybe that box of chocolate is a few dollars cheaper come the Berkshire annual meeting in May 2024.

Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations or anything else? Email brian.sozzi@yahoofinance.com

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