Recently, the outlook for U.S. inflation has become clouded once again. As geopolitical conflicts escalate, gasoline prices have surged, rising approximately 27% since the conflicts began. Since oil is a raw material for numerous products, the increase in oil prices directly pushes up various logistics costs, including those for retail and industrial goods transportation, sparking market concerns about widespread inflation.
The latest economic data has further intensified these worries. The Producer Price Index (PPI) released on Wednesday was significantly higher than expected. Data shows that U.S. producer prices rose by 0.7% month-over-month in February 2026, well above the market expectation of 0.3%. Year-over-year, the PPI increase reached 3.4% in February. The core PPI, which excludes the volatile categories of food, energy, and trade services, saw an even larger year-over-year increase of 3.5%. As a leading indicator of retail prices, the persistent rise in the producer price index typically predicts consumers will face higher price levels in the future.
More concerning is that the February data has not yet fully incorporated the impact of the surge in oil prices since March. At the same time, the conflicts have also driven fertilizer prices significantly higher, which will likely further push up food prices. The market generally believes that as the lagged effects of energy and food prices gradually emerge, the inflation situation may worsen further in the coming months. Reacting to this news, U.S. stocks experienced a slight decline on Wednesday.
Against this backdrop, incorporating stocks with certain inflation-resistant or counter-cyclical characteristics into investment portfolios has become a strategy worth considering. The following two stocks have garnered market attention due to their business models, which often perform steadily during inflationary or economic downturns.
AutoZone (AZO)
AutoZone, an automotive parts retailer, is one of the few companies with counter-cyclical characteristics. Similar to other aftermarket automotive parts retailers, AutoZone’s investment logic lies in the fact that when inflation or a recession occurs, consumers typically delay purchasing new cars. In such an environment, maintaining the normal operation of existing vehicles becomes an essential need. Whether car owners do it themselves or go through repair shops, the demand for replacement parts increases. The company’s historical data shows that its periods of strongest comparable sales growth often occurred during the tail ends of economic recessions.
As one of the exceptional operators in its industry, AutoZone has delivered impressive long-term returns. Over the past decade, its stock price has accumulated a rise of over 300%; since its listing in 1991, the increase has been more than a hundredfold. Although the company is not a typical high-growth stock, it has provided substantial returns to investors through consistent and stable share repurchase programs. Over the past ten years, its number of shares outstanding has decreased by nearly 50%. In the most recent quarter, AutoZone achieved a steady comparable sales growth of 3.3%. Analysts suggest that if inflation becomes a sustained market theme, this automotive parts retailer could potentially bring good returns to investors.
Dollar General (DG)
Dollar General, a discount retailer, is one of the primary beneficiaries of consumers tending to “trade down” during tough economic times. As the retailer with the most stores in the United States, Dollar General operates over 20,000 locations nationwide. When consumers tighten their budgets, they turn to stores and products with more competitive prices, giving Dollar General’s business model a natural advantage in an inflationary environment.
This trend was already evident last year. Pressured by a weakening labor market and new tariff policies, consumer spending came under strain, propelling Dollar General’s stock price up by 75% last year. With the potential for inflation to rise in 2026, this momentum could accelerate. The company has just concluded a strong fiscal year 2025, and its transformation efforts aimed at improving the distribution system, addressing out-of-stocks, and speeding up checkouts are yielding results. Full-year comparable sales grew by 3%, with the growth rate accelerating quarter by quarter. With inventory down 7%, the company reduced discount promotions, leading to improved profit margins.
Although the company’s announced performance guidance for 2026 (projecting comparable sales growth of 2.2% to 2.7%) initially disappointed investors, this might reflect management’s typically conservative stance at the beginning of the year. In terms of expansion, Dollar General plans to open 460 new stores in 2026 and remodel over 2,000 existing locations. Based on its guidance, the stock’s forward price-to-earnings ratio is below 18 times. If inflation does indeed make a comeback, this discount retailer could be in for another strong year.