While Inflation Eats Into Your Wallet, Companies Won’t Let It Eat Theirs

The 12-month CPI has returned to the spotlight, rising 3.4% for the 12 months ending in July 2026. Consumers continue to feel the impact, particularly through higher energy and food costs. Energy inflation remains elevated, driven by ongoing supply constraints following the closure of the Strait of Hormuz. Rising energy prices often create broader inflationary pressures, as higher transportation and production costs are passed along to consumers through the goods and services they purchase. However, history shows that inflation does not affect all parts of the economy equally. When comparing inflation trends with S&P 500 (SPY) operating margins, companies have historically been able to protect and even expand margins during inflationary periods. While inflation can erode consumers’ purchasing power, many businesses have the ability to adjust prices, helping preserve profitability and making equities a long-term hedge against inflation.