JP Morgan analysts on slower inflation - say that firms that benefited from the inflationary spike in the past two years may lose the power to charge higher prices for their goods and services, which is a headwind for their stocks and the equity markets in the remainder of 2023.
However, the analysts argue that rising energy inflation is likely to have the same impact:
- rising oil prices could lead to demand destruction, another headwind for corporates' pricing power
More on the oil price from the note:
- only around 25% of the rise in the oil price is demand-driven
- the larger portion of the spike is supply cutbacks by OPEC+
- says that if oil sustains the rally companies might not be able to pass on rising input costs as easily as they did in the past two years, hitting margins
