Companies will soon start reporting their latest quarterly financial results and investors have been warned that inflation is going to sting.

Retailers, auto makers and a wide range of manufacturers have all warned investors that a supply chain crunch and higher raw materials costs are adding to expenses and hurting profits. A COVID-19 resurgence during the third quarter threw many industries off-balance just as they were regaining their footing from the pandemic slump.

Many companies were able to pass off higher costs to consumers during the first half of the year without much fuss as the economy roared back from the pandemic. But consumer spending, which is key to the economic recovery, slowed a bit over the summer as COVID-19 cases spiked. Still, demand stayed strong for many products, but companies simply didn't have the supply and that stunted sales growth for many.

"We do think the consumer can absorb some of those higher prices, the challenge is what happens when a company doesn't have the supply to sell," said Jay Pestrichelli, CEO of investment firm ZEGA Financial.

Paint maker Sherwin-Williams trimmed its third-quarter sales forecast because of supply issues and higher costs. Homebuilders, including PulteGroup and Lennar, warned that higher materials costs and supply delays were hurting operations. Nike was one of the biggest names in retail to lower sales projections because of supply delays.

Many other companies have issued similar warnings at a time when the Federal Reserve has somewhat shifted its message on inflation. The central bank spent much of the year saying that rising inflation would be short-lived and tied to the recovery. In late September, Federal Reserve Chair Jerome Powell acknowledged that inflation has stayed higher for longer than expected and could continue into next year.

Worries about inflation becoming a longer-term reality for the economy are reflected in the bond market. The yield on the 10-year Treasury has jumped from 1.32% to as high as 1.54% during the past two weeks.

Analysts are warning that persistent inflation could continue crimping companies' bottom lines and consumers' willingness to spend, which would mean a continued slowdown for economic growth.

"If you end up getting lower growth and higher inflation, then you get stagflation and that's no good for the market," Pestrichelli said.