For much of the summer, fears of deflation dominated the list of investor worries. Stagnant demand amid soaring unemployment could usher in the kind of self-feeding spiral of declining prices that resulted in Japan's lost decade, some feared.

But even as consumer and investor confidence shows signs of mending, rekindled fears of inflation are on the rise as well. And concerns about whether rising input prices could combine with the limited pricing power many companies have to hammer profit margins have already started to take a toll on some stocks.

Frozen Turkey Prices Jump 28%

The concerns come in the wake of a hotly debated move by the U.S. Federal Reserve to inject more liquidity in markets by trying to reduce bond rates. Commodity prices, meanwhile, have already been spiking thanks to booming emerging market growth and poor crop harvests over the world.

Much stronger than expected inflation data in China hit world stock markets on Friday as investors expected that a rate hike in the major emerging economy could dampen overall demand.

But reports of rising prices at home have been rattling American shoppers lately as well. Prices for frozen turkeys have jumped 28% ahead of the Thanksgiving holidays compared to a year ago, for example. Rising feed costs are driving much of the gains commodity analysts said this week.

Worries about margins have already started to hammer some stocks. Dean Foods (DF), for example, saw its shares tumble more than 25% this week amid fears that surging feed costs combined with weak pricing power would hammer profits.

Clothing Makers Expect to Raise Prices Next Year

Tyson Foods (TSN), the largest chicken processor in the U.S., said it hoped to raise prices amid rising input costs in September. The company was looking for ways to hedge its exposure to rising prices. "However, we believe higher corn prices will ultimately result in consumers paying more for chicken, since we'll be forced to raise our prices to offset the increase in input costs," a company spokesman told Bloomberg News.

As cotton prices surge, some clothing makers are also feeling the pressure. Shares of The Jones Group (JNY) have fallen about 35% over the last month as clothiers try to push for price increases. Other companies like Hanesbrands (HBI) and VF Corporation (VFC) expect to raise prices by 10% next year.

In September, British clothing maker Next said that commodity inflation would force it to raise prices and that the era of perpetually declining clothing costs that customers had grown accustomed to may be coming to an end.

"It's the end of the cycle where clothing prices have come down every year for 15 years," Next CEO Lord Wolfson said. "The age of ever-decreasing clothing prices is over."

Deflation Also a Threat

Moves by some emerging markets to cool their booming economies could help bring down commodity prices. India, for example, has embarked on a series of rate hikes and speculation that China could follow suit pushed down commodities during trading Friday.

But investors need to keep a close eye on commodity prices nevertheless. Fears of inflation as the U.S. economy showed signs of a sharp recovery at the start of the year were abruptly replaced by worries about deflation by the summer.

The risks to the stock market, though, may emerge from both forces.

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jmichele1239

Audit the Fed! Thankfully Congressman Ron Paul will head up the committee to do just that. that is when we will discover that this inflation has been set up by Mr. Ben Bernacke. The nation isn't bankrupt. It's the currency that is bankrupt. That, and the character of the Fed, Goldman Sacks, the Banksters and those in Congress all these years who have been working for themselves and not for the American people. We are in for dreadful times ahead. Recovery? What, are you kidding?

November 15 2010 at 12:59 AM Report abuse rate up rate down Reply
ronsjigslures123

Its not only the USA that has lost buying power its also the UK, and a lot of other countrys also .. this is a hugh world mess not just the USA, and will take many years to even get a handle on all of this. Its hard enough to try to fix your own country and its even harder to try to fix a dozen others also, so be ready for the LONGGGGG haul for this who situation. if your not you will sink and not swim.

November 13 2010 at 8:34 PM Report abuse rate up rate down Reply
ronsjigslures123

The auto industry would love to pump out tones of cars this year, it will not happen if these cars sit on docks and huge parking lots clicking out of date to the next year so the cars and trucks are not worth the dollors they would get for the 2011 cars. they would have to be sold as last years cars at cheaper prices, same with TV,s and lots of elecronics they are dated manufacturing products that carry warrents, sitting on warehous shelfs is loosing them money every month. People look at dates when buying food, and they also look at dates when buying high priced products also. To get the manufacturing USA back on track they have to FIX the OUT GOING money that familys pay out first, so people have the extra cash to by anything again.

November 13 2010 at 8:28 PM Report abuse rate up rate down Reply
fasteddie1257

Nearly 50% of Capital Hill are millionaires, and handful are billionaires. Yet, the want the average buisnessman that GROSSES 250K and up to pay more taxes.

November 13 2010 at 8:27 PM Report abuse +1 rate up rate down Reply
1 reply to fasteddie1257's comment
warrenbent

What kind of a mypic fool can be convinced that preserving freedom has anything other than a negative correlation with confiscating the fruits of felllow citizens labor. I guess in this string we have ou answer. In a classic tale of man bites dog, it's as if certain baffoons imagine the more government steals, the freer the citizenry becomes.

November 14 2010 at 9:15 AM Report abuse rate up rate down Reply
fasteddie1257

The Socialist posters either cannot see the light, or depend on someone else for thier means. The Gimme-Gimmies.

November 13 2010 at 8:21 PM Report abuse rate up rate down Reply
ronsjigslures123

This country has nothing to do with imports and exports situation right now. The problem is internaly with the 45% DEGREESE buying power the millions of familys do not have and will not have for a long time to come. If the millions can,t just go to Wal-mart and spend 300 to 400 bucks at a time or a grand like people were doing 10 years ago, this country is in a huge problem adjustment. Manufactures can ramp up product production right now and start turning out stuff like crazy, but they will not because whats the use if it sits in a ware house some where going OUT OF DATE and no one buying the stuff, its a waist of money. Simple the USA was the buying power for the world and the USA its self THAT HAS STOPED and it killed the ecconomy.

November 13 2010 at 8:20 PM Report abuse +1 rate up rate down Reply
ronsjigslures123

If you own a home,shop at the grocery store, pay taxes, pay electric bills,water,sewer,property taxes,taxes on goods, and all other things that are connected to just regular family living .. and you have not seen at least a 45% increase of your money going out for the same living 4 tears ago then your living in a box on the street. This is called paying out MORE than your taking in to run your family or almost paying out ALL of what your bring in to run that family TODAY. ITs called going broke. Really simple and easy to explane, millions of familys are pulling money from savings,401ks, and every where else to stay alive ..the problem with that is it takes trillions of buying power out of the USA ecconomy and IT WILL RUN out for millions of familys soon. Good luck to all.

November 13 2010 at 8:12 PM Report abuse +1 rate up rate down Reply
fasteddie1257

Barry always wanted $4 gasoline..About to get his wish.

November 13 2010 at 8:10 PM Report abuse +1 rate up rate down Reply
fasteddie1257

Planned inflation..Ask Uncle Ben Bernanke. QE2

November 13 2010 at 8:05 PM Report abuse +1 rate up rate down Reply
ronsjigslures123

Its real simple all you have to do is remember that a BUCK is not worth a BUCK anymore and will not be worth that for some time in the future. Even millionares are getting hit also they are finding out a million bucks is not worth a million bucks anymore. Inflation is eating away at this country and many parts of the world, and there is no way to stop it. Simple math with no education required: when wages are stalled and many raises and 401k,s are getting really weak, and a family of 4 is paying out a average of 40% MORE money THAN 4 years ago to live in the same house.. here,s where the no collage eduction need part comes in .. simple that fgamily of 4 DOES NOT have the extra money to spend on other stuff, at big box stores, restrauants, other palces like before in turn INFLATION hits and will stay untile the playing fielsd is evened out for the family person. This country does not run on the rich it runs on the millions of family people they are the ones that spend money in every nook and crany of our ecconomy.

November 13 2010 at 8:04 PM Report abuse +1 rate up rate down Reply