Procter & Gamble (NYSE: PG) makes a wide range of products that use a large array of ingredients, packaging, and materials. The extensive logistics involved in gathering those materials, creating the products, and packaging them for sale has given P&G significant insight into the workings of the supply chain and of the broader economy as well. Like many of its consumer staples peers, this insight helps P&G get a pretty good read on inflation and what to expect in the future.

In a presentation on the topic recently, company management said it expects inflation to continue moderating but also remain elevated above the Federal Reserve's 2% target rate. Here's why inflation remains a big problem that's still working its way through the system.

In the presentation, P&G provided a slide that outlined the impact of three cost items: foreign exchange, freight, and commodities/materials. This trio created a $3.3 billion headwind in fiscal 2022, which amounted to $1.29 less in earnings per share. In fiscal 2023, the company expects the impact to be $3.5 billion or roughly $1.40 per share.

Continue reading

Source Fool.com