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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