Does rising inflation put the Woolworths share price in the buy zone right now?

Rising inflation has been tipped to drive Woolworths' sales growth.

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Key points

  • The Woolworths share price has been tipped to gain on the back of rising inflation 
  • Brokers at Citi reportedly expect the company's sales growth to be boosted by inflation 
  • The broker is said to have tipped a 12% upside to the supermarket giant's share price 

Australia's inflation rate hit a two-decade high last week and the Woolworths Group Ltd (ASX: WOW) share price could be set to benefit.

Top brokers have tipped the S&P/ASX 200 Index (ASX: XJO) supermarket giant as an inflationary beneficiary with a potential 12% upside.

The Woolworths share price is $37.97 at the time of writing.

Let's take a look at why these experts are expecting the supermarket operator to cash in on rising inflation.

Is the Woolworths share price a buy in August?

Australia's inflation rate has taken off in 2022 and shows little sign of slowing. But while that might dint Australians' back pockets, it could bring good news for the share price of ASX 200 supermarket giant Woolworths.

Top broker Citi expects rising inflation to boost sales growth for ASX 200 supermarkets, The Australian reports. And that could drive stocks in the category higher.

The broker's earnings before interest and taxes estimate for Woolworths this financial year reportedly sits at 14%. Its analysts said, courtesy of the publication:

While the supermarkets have outperformed in recent months and are well held, we expect earnings upgrades could drive them further towards our revised target prices.

And its target price for Woolworths shares is said to be $42.50. The broker also reportedly believes the supermarket is a buy right now.

Citi isn't alone in expecting Woolworths to thrive amid inflation. The supermarket giant is one stock that is able to resist cost inflation, Morgans analyst Andrew Ting penned for Livewire.

Meanwhile, Goldman Sachs also tips Woolworths to deliver strong sales growth and profits in the near future, as my Fool colleague James Mickleboro reports. It's also expecting the supermarket giant to grow its dividends in the coming financial years.

Goldman Sachs has hit Woolworths' shares with a $40.50 price target and a buy rating. That represents a potential upside of 6.7%.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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