Consumer prices continued to climb in May as rising oil costs put fresh pressure on the economy, increasing fears of a potential slowdown. Although a peace deal was reached between Iran and the United States, it is too early to predict how fast oil prices will return to normal.

The Federal Reserve has continued to struggle to bring inflation back under control in the past few months and is now mulling hiking interest rates at the end of the year.

Against this backdrop, investors may consider defensive stocks from the consumer staples sector, such as The New York Times Company (NYT Quick QuoteNYT - Free Report) , Arko Corp. (ARKO Quick QuoteARKO - Free Report) , B&G Foods, Inc. (BGS Quick QuoteBGS - Free Report) and The Coca-Cola Company (KO Quick QuoteKO - Free Report) .

These stocks have seen positive earnings estimate revisions in the past 60 days, carry a Zacks Rank #2 (Buy) at present, and are set for solid returns. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Inflation Rises in May

The Consumer Price Index (CPI), a key measure of the prices consumers pay for goods and services, rose 0.5% in May from the previous month after increasing 0.6% in April, according to the Commerce Department's report released Thursday. On a year-over-year basis, CPI climbed 4.2%, recording its biggest increase since April 2023.

While both the monthly and annual figures matched economists' expectations, inflation has steadily accelerated over the past three months. Year over year, CPI increased 3.3% in March before rising to 3.8% in April.

Core CPI, which excludes the more volatile food and energy costs, increased 0.2% in May from the prior month and 2.9% compared with a year earlier. The monthly gain came in below analysts' expectations of 0.3%, while the annual reading aligned with forecasts.

Inflation surpassed the 4% threshold for the first time in three years as oil prices surged owing to the Middle East crisis. Over the weekend, President Donald Trump suggested that Iran had agreed to a peace deal, which was finally signed on Sunday, ending the months-long war.

Trump also assured that the end of the war would reopen the Strait of Hormuz immediately. Although this hints at lower oil prices in the near term, it remains unclear when energy prices will return to normal.

Oil prices have jumped nearly 40% since the conflict began, pushing inflation to its highest level in three years.

The Federal Reserve, which uses CPI data to track its 2% inflation target, paused its rate cuts last year. Earlier, investors had expected the central bank to resume lowering interest rates during the second half of this year.

Now, several Fed officials believe interest rate hikes could become necessary if inflation remains above the 2% target. Higher interest rates would raise borrowing costs and could place additional pressure on both consumers and investors.

4 Low-Beta Consumer Staples Stocks With Growth Potential

The New York Times Company

The New York Times Company is a leading global media organization focused on delivering high-quality journalism and information. Founded in 1851 and incorporated in 1896, NYT has evolved from a traditional newspaper publisher into a diversified digital-first media company with a strong global subscriber base and a growing portfolio of lifestyle and entertainment products. 

The New York Times Companyhas an expected earnings growth rate of 19.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5% over the last 60 days. NYT has a beta of 0.95 and a current dividend yield of 1.25%.

Arko Corp. 

Arko Corp.’s primary asset is a controlling stake in GPM Investments. ARKO, formerly known as Haymaker Acquisition Corp. II, is based in Richmond, VA.

Arko Corp’s expected earnings growth rate for the current year is 93.3%. The Zacks Consensus Estimate for current-year earnings has improved 11.5% over the past 60 days. ARKO has a beta of 0.98 and a current dividend yield of 1.39%.

B&G Foods

B&G Foods, Inc. boasts a diversified portfolio of more than 45 brands, including B&G, B&M, Cream of Wheat, Las Palmas, Mama Mary's, Maple Grove Farms, Mrs. Dash, New York Style, Ortega, Pirate's Booty, Polaner, SnackWell's, Spice Islands and Victoria. Many of these brands hold leading market shares in different regions. BGS frequently engages in acquisitions and innovations to further strengthen its portfolio.

B&G Foods has an expected earnings growth rate of 11.8% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 5.6% over the last 60 days. BGS has a beta of 0.49 and a current dividend yield of 18.86%.

The Coca-Cola Company

The Coca-Cola Company’s strong brand equity, marketing, research and innovation help it to garner a market share of more than 40% in the non-alcoholic beverage industry. KO is putting its best foot forward to evolve its business model to become a total beverage company with something for everyone to drink. The Coca-Cola Company has coped with the industry-wide flattening of soda sales over the years by going on a buying spree and making investments in healthier alternatives like coffee, sparkling water and sports drinks.

The Coca-Cola Company has an expected earnings growth rate of 8.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the past 60 days. KO has a beta of 0.35 and a current dividend yield of 2.57%.