“I actually think inflation might help some of the retailers actually start prompting somewhat better comparisons,” he added.
It’s possible big retailers reporting quarterly numbers this week, such as Macy’s, Walmart and Nordstrom, could give guidance about inflation. But for now, Caffrey believes it’s too early to determine if rising prices will fetch bigger profits. So he’s staying neutral on the space.
But there are two areas he’s confident will benefit from rising inflation.
“Certainly, financials might be beneficiaries if this leads to a higher interest rate environment or concerns of higher interest rates,” Caffrey said. “It could also be helpful for the energy stocks to the extent that higher inflation is caused by higher oil [and] higher gasoline prices.”