Corbu LLC’s Chief Economist Samuel Rines has warned that companies driving inflation by testing consumer tolerance to price increases could render hawkish Federal Reserve policy toothless.

In a recent appearance on the Bloomberg Odd Lots podcast, Rines cautioned investors against reading too much into U.S. economic data for their decisions, as it might follow a false narrative.

According to Rines, price increases contributing to U.S. inflation are caused by companies using macroeconomic events to test consumers’ tolerance.

For instance, PepsiCo reportedly used its 4% Russian revenue loss from the Ukraine war to justify double-digit price increases, leading competitors such as Coa-Cola, Dr. Pepper, and Snapple to follow suit.

Rines further explained that even rising chicken wing prices were being used to test consumer tolerance, citing aviation-themed chicken wing chain Wingstop’s food price increases even when the raw ingredient price fell 50%. Rines also noted that Middle American businesses, such as Cracker Barrel, test consumers with wages and higher menu prices.

Furthermore, while hotel and cruise ship occupancies haven’t returned to pre-pandemic levels, Rines pointed out that the rate per room and booking volume has risen significantly.

All of these examples contribute to inflation, Rines said, and they show that investors should not rely solely on economic data but should also consider how companies are testing consumer tolerance to price increases.