Investors will get their latest reading on inflation the week of Jan. 12-16. On Jan. 13, the December consumer price index (CPI) will be released. Then on Jan. 14, they’ll get a read on the producer price index (PPI).
Table of Contents
Spoiler alert…the data is likely to be more of the same. Both the CPI and PPI readings are expected to come in between 2.6 and 3.0. That signals that the rate of inflation isn’t accelerating, but it’s not moving lower either.
This matters to investors for two reasons. First, higher prices reduce the purchasing power of your dollars. So far, there hasn’t been a broad decline in consumer spending, but that depends on your income level. In 2026, investors are also having to weigh a job market that is showing cracks. That impact may not be reflected in consumer spending.
Second, managing inflation is one part of the Federal Reserve’s dual mandate. Having a rate well above the Fed’s preferred 2% target is likely to be the reason it will keep interest rates steady at its next meeting in late January.
However, investors can turn any change in economic data into opportunities. In this case, investors should look for companies that will likely be unfazed by price pressures.
What You Need to Know About This Round of Inflation Data
The CPI and the PPI both measure inflation. However, the CPI is a lagging indicator as it reports where prices have been. The PPI, by contrast, is a leading indicator. This goes back to basic economics.
Companies experience price increases before the consumer does. In 2025, producer prices moved higher primarily due to rising commodity prices and tariffs.
But this time around, both the CPI and the PPI will be lagging indicators. You can thank the government shutdown for that. The information in this week’s PPI will be from November 2025. That means the data is likely to have already been reflected in the CPI.
It’s an anomaly. But it’s something to be aware of. In this age of high-speed algorithmic trading, these reports can increase volatility.
PepsiCo: Pricing Power in Action
PepsiCo (NASDAQ: PEP) remains a steady performer during inflationary stretches thanks to its pricing power and diversified product mix. The company’s strong brand equity across snacks and beverages—anchored by its Frito-Lay, Gatorade, and Pepsi brands—enables it to pass higher input costs to consumers without a significant decline in demand.
In the last two years, the company has had to manage higher input costs for sugar and packaging. However, the company has balanced those price increases with cost-control measures and supply chain efficiencies.
The company’s robust global footprint also insulates it from regional economic soft spots, while its growing lineup of zero-sugar and functional products supports pricing flexibility. Even with moderation in volumes, higher pricing has supported steady revenue growth and stable margins.
A core concern about PEP stock in the last year has been its valuation. However, at 16x forward earnings, the stock looks more attractive. And any help the consumer gets from tax refunds and economic growth could make the 12-month earnings projection of around 6.5% look very conservative.
Lifeway Foods: A Small Cap with Strong Margins
Lifeway Foods (NASDAQ: LWAY), best known for its kefir yogurt products, offers a niche play on resilient consumer demand for nutritious, probiotic-rich foods. The company has maintained strong gross margins—above 25% in recent quarters—despite volatile dairy prices. Lifeway’s success lies in strategic sourcing and a focus on value-added, health-oriented products that appeal to a loyal, premium-minded customer base.
The company’s agile cost structure allows it to pivot quickly to changing market conditions, which is vital when inflation pressures squeeze smaller brands. In addition, its expanding distribution across major retailers, along with steady international growth, creates multiple levers for long-term expansion.
Investors should note that the microcap nature of this stock adds volatility, but that also brings upside as the company scales. As consumers prioritize health over discretionary spending, LWAY looks well-positioned to deliver inflation-resistant growth. And with expected earnings growth of around 28% in the next 12 months, the consensus price target of $34 as of Jan. 9 may be too low.
Freeport-McMoRan: A Hedge Against Rising Input Costs
Freeport-McMoRan (NYSE: FCX) remains one of the best natural hedges against inflation. The company is a leading global producer of copper, the metal that underpins everything from EVs to data centers. When inflation persists, commodity prices tend to rise, and that often benefits miners like FCX.
With copper demand expected to outstrip supply through the decade, Freeport is well-positioned to capitalize on structural shortages. It’s also an indirect play on gold, which will continue to be a debasement trade in 2026.
Operationally, FCX has managed costs effectively even as mining inputs and labor expenses rise. The company’s balance sheet remains strong with relatively low debt, giving it flexibility to invest in new production and shareholder returns. With inflation sticky and industrial activity stabilizing in China, copper prices could stay firm or move higher in 2026. That makes FCX not just a cyclical play, but a strategic inflation hedge in diversified portfolios.
The Bottom Line: Staying Invested in Pricing Power
Sticky inflation doesn’t have to derail portfolios. The key is holding companies that can pass along higher costs or benefit directly from rising prices.
- PepsiCo shows how brand strength supports pricing discipline
- Lifeway demonstrates the advantage of flexible, margin-conscious operations
- Freeport-McMoRan captures upside from commodity-driven inflation
Collectively, these stocks highlight resilience across distinct sectors: consumer staples, small-cap growth, and natural resources, providing investors with multiple ways to stay on the right side of persistent price pressures.
Leave a Reply