General Mills' (NYSE: GIS) quarterly conference call on Wednesday was dominated by the now all-too-familiar talk of inflation, which is beginning to significantly dent many industries' profits and even more consumers' wallets. CEO Ken Powell stressed that he expects inflation to grow even faster over the second half of 2011, but he also believes that the company will produce its highest earnings growth for the year in its upcoming fiscal fourth quarter.

General Mills sits in a pretty good position in the inflation battle when compared to competitors Kraft (NYSE: KFT) and Ralcorp (NYSE: RAH). The company has built significant brand equity in its bread-and-butter cereal brands like Cheerios and Wheaties that make it difficult for consumers to find substitutes or private-label knock-offs even as General Mills has been raising its prices. Kellogg (NYSE: K) has also built similar equity in its core brands. Even with its input costs rising significantly, General Mills was able to increase its gross margins from 37.9% to 39.2% through its own strategic price increases and cost cutting.

But even as General Mills and Kraft have been raising prices, it appears that private-label makers and grocery stores have had to boost prices even faster, making a trade-down even less favorable for consumers.

The small post-earnings sell-off in General Mills yesterday provides a good opportunity to scoop up some shares in a company that is weathering the inflation storm quite well. A nice 3% dividend yield also provides some protection in the face of returning volatility to the markets. As the past few weeks have shown, the market doesn't go up forever, and a little safety can go a long way.