📂 WEDNESDAY – Sector Scanner: “Inflation Pass-Through Lag Map”

Inflation does not hit every company at the same time.

Some businesses reprice instantly.

Others renegotiate once a year.

Some carry inventory purchased months ago. Others sign long-term contracts. Some absorb rising costs today and recover them two quarters later.

That timing difference creates earnings surprises.

With September CPI and Real Earnings arriving today, this Intel Drop maps the lag between inflation entering a business and the company passing it on to customers.

💡PROMPT TEXT:

(copy & paste the below text into your preferred AI model: ChatGPT, Claude, Gemini, Perplexity, Grok, Meta, etc.)

You are a macro equity strategist building an “Inflation Pass-Through Lag Map” as of October 14, 2026.

Use the officially released September 2026 CPI and Real Earnings data.

If they are not yet available, provide the framework only.

Never fabricate inflation data.

GOAL:

Identify sectors and industries where changes in inflation affect costs and customer pricing at different speeds, creating temporary margin expansion or compression.

STEP 1 — DECOMPOSE CURRENT INFLATION

Analyze relevant CPI categories including:

- Goods
- Services
- Shelter
- Food
- Energy
- Transportation
- Medical care
- Recreation
- Apparel
- Other meaningful categories

Identify:

- Accelerating inflation
- Stable inflation
- Disinflation
- Deflation

STEP 2 — DEFINE COST LAG

For every major industry estimate how quickly inflation reaches company costs.

Classify:

- Immediate
- 1–3 months
- 3–6 months
- 6–12 months
- >12 months

Examples include:

- Spot commodities
- Wages
- Rent
- Transportation
- Purchased components
- Contracted services

STEP 3 — DEFINE PRICING LAG

Estimate how quickly the business can reprice customers.

Classify:

- Immediate
- Monthly
- Quarterly
- Annual
- Contract Renewal
- Regulated / Delayed

STEP 4 — CALCULATE THE ECONOMIC LAG

Compare:

COST REPRICING SPEED

versus

CUSTOMER REPRICING SPEED.

Classify each industry:

A. Pricing Leads Costs
Potential margin expansion

B. Costs and Pricing Move Together
Margin relatively stable

C. Costs Lead Pricing
Temporary margin compression

STEP 5 — ADD REAL WAGES

Use officially released Real Earnings.

Determine how changes in household purchasing power affect customer resistance to price increases.

Higher pricing ability means little if customers cannot absorb it.

STEP 6 — IDENTIFY CONTRACT STRUCTURES

Analyze sectors with:

- Fixed-price contracts
- Cost-plus contracts
- Indexed pricing
- Annual resets
- Long-duration agreements
- Regulated pricing

Contract structure can dominate headline inflation exposure.

STEP 7 — MAP INVENTORY ACCOUNTING LAGS

For inventory-heavy industries evaluate whether:

- FIFO
- LIFO
- Average cost

can change the speed at which input inflation reaches reported margins.

Use only where material.

STEP 8 — BUILD FOUR INFLATION PATHS

SCENARIO A — Inflation accelerates

SCENARIO B — Inflation stays sticky

SCENARIO C — Inflation gradually cools

SCENARIO D — Inflation falls rapidly with weak demand

For every industry determine:

- Cost effect
- Pricing effect
- Margin effect
- Volume effect

STEP 9 — BUILD THE PASS-THROUGH LAG TABLE

Include:

- Sector / Industry
- Main Inflation Exposure
- Cost Lag
- Pricing Lag
- Contract Structure
- Customer Elasticity
- Current Margin Window
- Best Inflation Scenario
- Worst Inflation Scenario
- Representative Stocks / ETFs
- Confidence Level

STEP 10 — FIND THE MISPRICINGS

Identify:

1. Three industries where pricing currently appears to be running ahead of costs
2. Three where costs may hit before pricing catches up
3. Two sectors where disinflation could initially expand margins
4. Two sectors where falling inflation could compress margins
5. Two industries where contract timing matters more than CPI itself
6. One consensus inflation narrative that ignores the lag structure

STEP 11 — BUILD A 90-DAY MONITOR

Track:

- CPI components
- PPI components
- Wages
- Commodities
- Freight
- Company pricing commentary
- Gross-margin revisions

Clearly separate official data from inference.

Output in a clean table + 3–5 sentence explanation why this matters right now.

END PROMPT

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