Concerns over the record-high inflation, supply chain constraints, geopolitical conflicts between Russia and Ukraine, and the Federal Reserve’s upcoming interest rate hikes have kept the stock market under pressure since the beginning of the year. While the soaring inflation has been hurting the financials of several companies, consumer staples companies are well-positioned to pass on the rising costs to consumers and stay afloat because of almost inelastic demand for their products.
Moreover, the launch of new products keeping pace with changing consumer trends and digitization of operations is expected to drive consumer staples companies' growth. Investor interest in this defensive sector is evident from the First Trust Consumer Staples AlphaDEX ETF’s (FXG) 4.1% gains over the past three months versus the SPDR S&P 500 Trust ETF’s (SPY) negative returns.
