Rising Inflation Will Drive Stock Prices Higher, Says Expert: 'Pay Double For The Can Of Diet Coke…The Stock Price Will Eventually Follow'

Peter Mallouk, President of Creative Planning, emphasized that the rising costs of everyday items, like a can of Diet Coke, will eventually be reflected in stock prices.

What Happened: Mallouk explained during CNBC’s “Last Call” on Tuesday that contrary to popular beliefs, one should invest in the stock market during inflation instead of turning attention to asset classes like gold.

Mallouk stated, “Eventually if you are going to pay double for the can of Diet Coke… the stock price will eventually follow that. It's a great long-term hedge against inflation.”

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Why It Matters: Mallouk’s remarks come at a time when inflation data has been a focal point for economists and investors alike. U.S. inflation for April matched analyst expectations, breaking a three-month streak of higher-than-expected readings. This has reignited hopes for a return to the Federal Reserve's 2% inflation target.

However, inflation proved to be stickier than expected in March, with the Consumer Price Index surging by 0.4%, surpassing economists' expectations. This uptick has pushed the 12-month inflation rate to 3.5%, complicating the Federal Reserve's goal of maintaining a 2% annual inflation rate.

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