Inflation Defenders: 3 Stocks to Protect Your Purchasing Power

Stocks to buy

Inflation is proving to be stubborn. While the inflation rate in the U.S. has come down from a peak of 9.1% in 2022 to 3.2% today, it is getting difficult to push inflation back down to the U.S. Federal Reserve’s 2% annualized target. We’ll get the official inflation reading for March when the Consumer Price Index (CPI) is released on April 10. Hopefully, the newest data will show some improvement. But that might not be the case, especially with energy prices elevated and crude oil trading above $85 a barrel.

Commodity prices have also been marching higher, with gold testing new all-time highs. And prices for shelter, i.e. rents and mortgages, remain strong too. This is all to say that the inflation fight is not over yet, which Fed officials have been telegraphing for the past few weeks. The current situation has cast doubt on the timing and number of interest rate cuts we might get this year. Currently, markets are pricing in a 52% chance that the first rate cut happens in June. A few weeks ago, the betting was that there was a 75% chance of a June rate cut.

With high consumer prices remaining an issue, we offer inflation defenders: three stocks to protect your purchasing power.

Berkshire Hathaway (BRK-A, BRK-B)

Source: IgorGolovniov /

Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B), the holding company of Warren Buffett, has many of the attributes needed to defend against inflation. Berkshire is highly diversified and owns companies in economic sectors ranging from railroads and furniture to fast food and jewelry. One of Berkshire Hathaway’s largest and most profitable businesses is insurance. And, since people are likely to keep paying their home and auto insurance premiums in any economic environment, insurance is viewed as inflation proof.

Lastly, Berkshire Hathaway is sitting on a massive pile of cash. At the end of 2023, the company reported having a record $167.60 billion of cash on hand that it can deploy when an opportunity arises or continue holding for a rainy day, i.e. an economic calamity. The cash helps to fortify Berkshire’s balance sheet and the company against the impacts of inflation. If all this weren’t enough, Berkshire Hathaway also has a massive and highly diversified stock portfolio that’s currently worth just under $370 billion. BRK.B stock is up 16% on the year.

Procter & Gamble (PG)

Source: Jonathan Weiss /

When prices and interest rates are high, consumers naturally prioritize spending on essential items and put off discretionary spending. While insurance is viewed as a priority item for most people, so too are the products sold by Procter & Gamble (NYSE:PG). The company, which has been a growing concern since 1837, sells essential items such as Pampers diapers, Gillette razor blades, Crest toothpaste and Tide laundry detergent. These are the types of hygiene and household products people need in their everyday lives.

This gives Procter & Gamble pricing power, which is the ability to raise the prices of products without losing a detrimental number of customers. This pricing power has helped Procter & Gamble’s earnings hold up in the current inflationary environment. Procter & Gamble most recently reported fourth quarter 2023 earnings per share (EPS) of $1.84 versus $1.70 that had been forecast amongst analysts. Revenue of $21.44 billion nearly matched Wall Street estimates. Thus far, PG stock is up 5% in 2024.

Walmart (WMT)

Source: Jonathan Weiss /

When inflation is high, consumers naturally seek out the lowest prices possible. And for that, they turn to Walmart (NYSE:WMT). In times like these, with its low price guarantee and eclectic mix of household products, Walmart naturally attracts consumers. The company is also the largest grocery retailer in America, providing the necessary food items that insulate it from a downturn in sales. Walmart has credited groceries for driving sales in recent quarters, distinguishing it from competitors such as Target (NYSE:TGT).

Walmart’s earnings and stock price have performed strongly throughout the current inflation cycle. Up 20% over the last 12 months, Walmart announced that it was splitting its stock on a 3-for-1 basis after hitting an all-time high earlier this year. The stock began trading on a split-adjusted basis on Feb. 26, marking the company’s first stock split since 1999. The company has executed a total of 11 stock splits in its history. However, all previous stock splits were carried out on a 2-for-1 basis.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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