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Quarter-End Insights

Economic Moats Critical for Consumer Defensive Stocks

As the consumer picture darkens again, economic moats are more important than ever.

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  • Commodity cost inflation looks set to moderate as the global economy appears to be slowing once again. We expect the food CPI to peak in July or August.
  • The same drivers that are causing a pullback in commodities markets are likely to mean that consumer spending will remain strained for the remainder of 2011.
  • Given the continued challenging environment, we believe that economic moats are more important than ever. We recommend investors stick to the best-in-class names that have the most pricing power in their categories.

Philip Gorham does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.