Key insights
- Baird's upstream inflation tracker for US packaging and materials companies shows a year-to-date increase of 30% through May, the fastest since post-Covid. However, month-over-month inflation moderated in May, suggesting a potential plateauing of raw material costs after a spike. This is directionally positive, with margin recovery expected in H2 2026 driven by pricing initiatives.
Investing.com -- Baird reported that its upstream inflation tracker for packaging and materials companies in the United States showed a year-to-date increase of 30% through May, marking the most rapid increase since the post-Covid period. However, the firm noted that the inflationary trend slowed on a month-over-month basis in May.
The deceleration could indicate a plateauing phase following a spike in raw material costs that occurred after the Iran war, according to Baird. The firm characterized this development as directionally positive for companies in its coverage universe.
Baird stated that its base case scenario has been a step function change in raw material costs followed by a plateau. The firm expects pricing initiatives across the companies it covers to drive margin recovery starting in the second half of 2026.