What's going on?

Two giants of the global grocery industry � Kroger and Tesco � reported earnings late last week, and investors canceled all their plans so they�d be in when they arrived.

What does this mean?

The pandemic�s generally been a boon for grocery retailers: their stores stayed open when almost everything else was closed, and even the extra costs of safety measures were partly offset by strong sales growth. That might be why Tesco � the UK�s biggest retailer (for now) � saw its revenue at existing stores come in ahead of expectations last quarter. An uptick in food sales was matched by those in the company�s clothing and wholesaler segments, probably as more people got all dressed up for real-life brunch. It was a similar story across the pond: America�s number-two grocer Kroger likewise reported better-than-expected quarterly revenue and profit.

Why should I care?

The bigger picture: A read on inflation.

Grocers� earnings give you an important insight into how fast the prices of consumer goods are rising. Kroger, for its part, is anticipating inflation in the products it sells of 1-2% this year, which looks likely to be accurate (tweet this). The retailer plans to pass on those higher costs to customers, but it also stands to benefit from them: higher prices tend to incentivize consumers to switch to Kroger�s own-brand stuff � which typically delivers a higher profit margin than third-party items � as a way of saving money.

For markets: A mixed bag.

Kroger also upped its profit predictions for this quarter, which might be why share price rose 4% following its earnings report. But Tesco�s forecast stayed put, and its stock fell 4%. Then again, competition in its key UK grocery market is notoriously fierce, particularly on price. And with inflation increasing, Tesco may struggle to meet its profitability goals even if sales continue to grow.