Inflation Just Hit 3.7%. History Says to Own Companies That Can Do This 1 Thing.

Investors won't get a fresh inflation update for another week. However, the trend has been strikingly clear.

The Consumer Price Index rose 3.7% during the month of September. This closely watched metric is still well ahead of the Federal Reserve's long-run 2% target, a level last seen in early 2021. And it marked an acceleration from August.

It's impossible to know when inflation will cool down. Investors are forced to deal with this reality. History says in this type of environment, it's a smart move to own companies that can do this one thing consistently.

Image source: Getty Images.

Asking customers to pay more

If businesses are able to occasionally ask customers to pay more, it requires selling products and services that are truly differentiated. Only high-quality companies fall into this category. They should be on your watch list.

Pricing power is a feature that's developed over long periods of time. It doesn't appear out of thin air. Companies that have it possess some form of economic moat, such as a beloved brand that resonates strongly with customers relative to rival offerings. This usually shows up in the financials through high gross margins and returns on invested capital.

Just as consumers face inflation in their daily lives, companies can feel the same in their cost structures. If they have proven pricing power, it's much easier for them to handle inflationary pressures. They can pass higher costs on to their customers, thereby protecting their profitability.

This provides a unique advantage. Weaker businesses aren't so fortunate. If they raise prices, there's a greater likelihood that they'll lose customers who find their products and services easily substituted. Elite companies don't have this problem, as their earnings power can hold up in inflationary times. And this is where investors need to look.

Three businesses to watch

Apple (NASDAQ: AAPL) arguably has the world's most valuable brand. It's the perfect example of a high-quality business with pricing power. Its premium hardware devices register robust demand. Within its products segment, the company posted a 39.3% gross margin in fiscal 2026 (ended Sept. 26).

Customer loyalty comes not only from how well-designed and easy to use the products and services are, but from the proprietary ecosystem they combine to form. Once someone owns an iPhone, an Apple Watch, and an iCloud subscription, for example, it's extremely difficult to switch to a rival.

Apple has historically been able to raise prices on new devices without pushing buyers away. When inflation picks up component and labor costs, the company has room to pass them along.

Unlike mass-market carmakers, Ferrari (NYSE: RACE) deliberately limits its supply to maintain the status and exclusivity of its brand name. During the three months that ended Sept. 30, it shipped just 3,368 vehicles. And there are long wait lists for the newest models.

That scarcity is what supports pricing power. Wealthy consumers view these as collectibles. And they aren't deterred by price increases, which might actually drive even more demand. For select special-edition models that cost seven-figure sums, Ferrari collects sizable deposits well before delivery.

The company's profitability speaks for itself. Ferrari just reported a Q3 operating margin of 29.7%, which is typical of a luxury brand. If needed, the company has no problem charging customers more.

In the world of financial services, American Express (NYSE: AXP) stands out. Its pricing power shows up in what it charges its cardholders. In the past 10 years, the average fee per card has risen by 177.6%.

In September 2025, American Express increased the annual fee of its flagship Platinum Card from $695 to $895, a notable bump. "One year after the U.S. Consumer Platinum refresh, spend retention remains at 99% for the portfolio," chief financial officer Christophe Le Caillec said on the Q3 2026 earnings call.

People pay more because they clearly value the perks, rewards, and benefits American Express offers. And there's a certain level of prestige with having these cards in your wallet. Additionally, the 190 million merchant locations are comfortable paying higher processing fees because they get access to affluent customers.

Apple, Ferrari, and American Express, all stocks that have crushed the market in the past decade, are outstanding businesses. Investors shouldn't rush to buy their shares, though, as it's critical to assess their valuations before putting money to work.

American Express is an advertising partner of Motley Fool Money. Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends American Express, Apple, and Ferrari. The Motley Fool has a disclosure policy.