Kensho Stats

Here's what beats the market when inflation is rising like it is now

Belgian Philippe Gilbert of the BMC team celebrates as he crosses the finish line under heavy rain to win the 12th stage of the 98th Giro d'Italia, Tour of Italy, cycling race between Imola and Vicenza on May 21, 2015 in Vicenza.
Luk Benies | AFP | Getty Images

Wednesday morning the Labor Department said the consumer price index rose 2.1 percent through December compared with a year earlier, the fastest pace for inflation in more than a year. History tells us technology and industrial stocks outperform the market when inflation quickens.

Using hedge fund analytics tool Kensho, we found 32 periods going back to 1981 when CPI annual growth was between 2 and 3 percent. Here were the best-performing S&P 500 sectors, on average, during those periods, along with the average performance of the S&P 500.

Here were the best-performing members of the Dow Jones industrial average, on average, during those periods:

Bottom line: A little bit of inflation is good for equities, especially those with pricing power, history shows.

(Note: The periods of inflation had varying time lengths. Some were just one month, while others were six months or more.)

Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.