You know inflation means rising prices. 📈

But how does that impact the companies you're investing in? 🤔

Inflation can be a double-edged sword for businesses ⚔️

While it can allow them to charge more for their products, potentially boosting revenue💰

It can also drive up their costs for raw materials, labor, and other expenses 🛒

Imagine a candy company that sells chocolate bars 🍫

If inflation drives up the price of candy, the company can earn more per chocolate bar sold 💸

But if our candy company has to pay more for cocoa beans and factory workers, its costs go up.

And if costs rise faster than the company can raise prices, its profits get squeezed 😥

Some companies can pass rising costs on to customers by raising prices, preserving their profits 💰

These companies often sell essential or highly desired products that people will keep buying despite higher prices 🛒

Think utilities, healthcare, and yes, even candy 💡💊🍫

People will keep buying these things even if they cost a bit more, because they need or really want them.

But companies that sell optional or easily substituted products may struggle to raise prices 🛍️

If they raise prices, consumers may simply buy less or switch to cheaper alternatives 🔄

So during times of high inflation, investors often favor companies with "pricing power" 💪

These are firms that can raise prices without losing too much business 🏆

Investors also watch companies' profit margins during high inflation times 📏

If a company's costs are rising faster than its revenues, its profit margin will shrink, which can be bad for the stock price 📉

Ultimately, inflation's impact varies from company to company 🏬

As an investor, it's important to not only consider how inflation affects you, but how it affects the companies you own 🔥