Dive Brief:
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Krispy Kreme is expecting inflation to drive up some of its costs by double-digit percentages this year, the doughnut maker’s CFO said Tuesday.
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The company is projecting inflation in excess of 20% on items like sugar, where the market remains around 10-year highs, CFO Jeremiah Ashukian said during an earnings call. He said the company expects to see mid- to high-single digit inflation overall for the year.
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Meanwhile, the company could also see deflation on certain items, including key commodities like wheat and edible oils, according to the finance chief. “It's a bit of a mixed bag,” he said.
Dive Insight:
Krispy Kreme reported earnings in a week in which investors were grappling with new uncertainties around the outlook for the broader economy.
The Bureau of Labor Statistics on Tuesday reported that inflation edged up in January, sending Wall Street into turmoil. The core consumer price index rose 0.4% in January compared with 0.3% in December, and increased 3.9% on an annual basis, prompting concerns that a cut in the Federal Reserve’s main interest rate may not happen in May as some had predicted.
On the heels of this news, the Dow Jones Industrial Average nosedived 525 points, or 1.4%, its largest single-day drop since March 2023, CNN Business reported. The S&P 500 declined 1.4% and the Nasdaq Composite fell about 1.8%, the publication said.
Inflation in the U.S. reached a 40-year high in June 2022 but significantly decreased by December 2023, thanks to several factors, including Federal Reserve interest rate hikes, supply chain efficiencies, and a decline in gasoline prices, according to Forrester.
Seema Shah, chief global strategist at Principal Asset Management, said in a note to clients that January’s number, while higher than expected, was driven in part by segments that are less important for the Federal Reserve as it considers inflation against possible rate cuts, NBC News reported.
“It’s important not to overreact and jump to the assumption that an inflationary resurgence is developing,” Shah wrote, according to the report.
