Top CFOs haven't seen inflation since 2010

The debate may be raging over whether inflation is transitory, but American CEOs and CFOs haven't been this concerned about rising prices in more than a decade.

224 cited inflation during their earnings calls for the second quarter. This is the highest annual number of S&P 500 companies reference inflation on earnings calls from at least 2010, John Butters, senior data analyst at FactSet, wrote in his weekly note.

Butters listed the sectors that are toping up the wall of worry the most.

At the sector level, the Industrials sector had the highest number of companies that cited inflation on earnings calls for Q 2 2021 at 50, followed by the Consumer.

Sectors 33 Discretionary Financials 29 and Consumer Staples 27 Detailled he detailed.

Some of these calls coincided with gas prices hitting seven-year highs and record-high lumber prices as well as government reports.

Consumer prices for August jumped 5.3% according to the Labor Department, matching economists expectations. Prices increased at a 5.4% annual pace in July, matching the prior month's gain as the fastest since August 2008 and second on July 2009.

Producer prices surged for the fifth consecutive month of August at fastest annual clip on records, jumping 8.3% year over year, as supply chain bottlenecks continue to trip up deliveries.

Companies, including Tyson Foods and Kroger, have warned investors and consumers to prepare for price hikes.

The largest U.S. grocer said last week it is passing on higher cost to the customer where it makes sense to do so, said CFO Gary Millerchip on the company s second quarter earnings, as reported by FOX Business. Kroger sees inflation as high as 3%.

While uncertainty is about whether inflation will subside, it is not eating into bottom-line growth yet, observes Butters.

Both the expected earnings growth rate for CY 2021 42.6% and the estimated net profit margin 12.4% for CY 2021 are higher today compared to the estimates due to the 30th June, he added :

Still, Torsten Slok, chief economist at Apollo Global Management, points to rising wages and looming labor shortages, record home prices and climbing rents as troublesome foreshadowing.

I think that the risk here is that we could have an inflation problem which will likely last at least until the end of this year and potentially well into next year, he said during a recent chat on Barron Roundtable. After the Federal Reserve's two-day meeting in January, which ends on Wednesday, investors will get a fresh update on inflation expectations. Chairman Jerome Powell will certainly be on the floor during his Q&A press conference on Wednesday, which begins at 2: 30 pm ET.

Additionally, Costco, Nike and FedEx have all reported earnings this week and are able to address inflationary trends for their respective businesses.

As for the broader market, the S&P 500 is down in September 2%, the month traditionally considered a rocky month for equities, but with inflation rising stocks will likely face a double headwind in the coming weeks.