JLGutierrez
Consumer prices rose 8.3% in August in comparison to last year and surprised with a 0.1% jump from the prior month.
Some of the categories that ran hot were breakfast cereal (+16.4% Y/Y), poultry (+15.9%), milk (+17.0%), coffee (+17.6%), and eggs (+39.8%). Overall, food prices were up 11.4% in August from a year ago and tracked 0.1% higher from July. Watch food companies like General Mills (GIS), Kraft Heinz (NASDAQ:KHC), Hormel Foods (HRL), J.M. Smucker (SJM), Campbell Soup (CPB), and Post Holdings (POST) as the inflation battle continues.
Meanwhile, apparel prices were only up 5.1% from a year ago amid heavy markdown activity in the sector. Sporting goods only saw a 3.8% increase in prices from a year ago as some of the pandemic benefits wore off. That means companies like Macy's (M), Nordstrom (JWN), American Eagle Outfitters (AEO), and DICK'S Sporting Goods (DKS) are battling to keep up with inflation on their end.
Meanwhile, airfares in the U.S. were up 33.4% in August compared to a year ago on an unadjusted basis as travel demand has stayed very strong.
On a month-to-month comparison, air fares fell 4.6% in August after dropping 7.8% in July, according to data compiled by the Bureau of Transportation Statistics.
In general, analysts expect fares to stay elevated due to higher fuel costs and ongoing staffing pressure. Some airlines have also tightened up capacity, which will support pricing.
The upcoming JetBlue-Spirit merger is also being watched in the context of fares. The deal will create the fifth-largest airline in the U.S. Analysts think the combination could lead to higher fares on certain routes if competition is reduced.
Watch Spirit Airlines (SAVE), Southwest Airlines (LUV), United Airlines (UAL), Alaska Air Group (ALK), Hawaiian Holdings (HA), American Airlines (AAL), JetBlue (JBLU), Allegiant Travel (ALGT), Mesa Airlines (MESA), SkyWest (SKYW), Sun Country Airlines (SNCY), and Frontier Group (ULCC).
Read more about the August inflation report.