Inflation's a double-edged sword and no one knows that better than the US employees and companies that have borne the brunt of the recent price increases. There was good news for Kellogg (K) workers in the struggle against inflation, though, as yesterday they ratified an agreement with the food manufacturing company. The agreement secured better employment terms for the company’s short-term employees and raised wages to be in line with the higher cost of living, protecting low-wage workers. While Kellogg workers manage to escape free, things aren’t looking that good on the business-end when it comes to the price increases.
A similar US-based consumer foods retailer, General Mills (GIS), reported poor Q4 results two days ago. The company saw its earnings per share drop below Wall Street estimates mainly due to higher inflation-driven raw material costs. Despite the drop, though, the company expects a bounceback as more people working from home drives higher food demand.
Why it matters
General Mills’ shares fell by over 5% after below-average earnings release, while Kellogg’s shares have been slowly edging up by 0.2%. The next 12 to 18 months will be critical, especially for consumer-focused companies like these, as inflation unfolds throughout the economy.
