When you're a company like Procter & Gamble (NYSE: PG) that's been chugging along for well over a century, not a whole lot changes in the course of three months. In P&G's latest quarterly report, we see a lot of trends simply continuing -- the continued growth of P&G's major brands, the inroads it's making into overseas markets, and the focusing of its brand portfolio, which included the sale of Pringles to Diamond Foods (although this happened after the close of the fiscal third quarter).

Unfortunately, we're also continuing to see cost inflation dinging the company's profits. In the quarterly report, we see it in phrases like "higher input costs" and "higher commodity costs" and in the financials through a lower gross margin. For the third quarter, P&G's gross margin fell from 51.9% last year to 50.5% this year.

Time to worry?
The easy answer is that this situation is far from ideal. As it stands, these higher commodity costs mean that more sales dollars are going out the door to pay suppliers and fewer are making their way down to the profit line.

But one of the main reasons investors buy companies like P&G in the first place is because strong brands supposedly give the company the ability to raise prices in situations like this without losing a whole lot of business. This is where it gets interesting.

Earlier this week, I covered Coca-Cola's (NYSE: KO) first-quarter earnings and it signaled that it would be raising prices. Kimberly-Clark (NYSE: KMB) also reported earnings this week and said the same. The culprit? Those darn rising commodity costs.

This is significant because to date these companies largely haven't been raising their prices to offset the rising costs -- they've just been eating it. That means that in the coming quarters we'll get a view of how consumers react to price increases and whether brand power still has significant pricing power.

Who are we really worried about here?
With all -- or at least most -- of the major branded-goods manufacturers raising prices or getting ready to do so, the concern is that the move will push more consumers toward private- and store-label products offered through retailers like Costco (Nasdaq: COST), CVS Caremark (NYSE: CVS), and Safeway.

While that's a valid concern, it's important to remember that private-label manufacturers face the same rising input costs as the branded-good manufacturers do. And because they operate on slimmer profit margins, they have far less room to absorb those costs.

Consider Cott (NYSE: COT), for instance. It makes private-label sodas, bottled water, juices, and other drinks that are sold through Wal-Mart and other major retailers. For 2010, Cott's gross margin was 14.8%. Compare that to Coke at 63.9% and PepsiCo (NYSE: PEP) at 54.7% over the same period, and it's easy to see that the private-label manufacturers will be pressured as well by rising costs.

But even if private labels do have to incrementally raise prices, there's still the potential that as branded-goods prices rise, consumers will get fed up and trade down to lower-priced products -- even if those prices are rising incrementally as well. While this is hardly a "sky is falling" issue for P&G, it is something that investors should pay attention to in the coming quarters.

Costco, Coca-Cola, and Wal-Mart are Motley Fool Inside Value recommendations. Costco is a Motley Fool Stock Advisor pick. Wal-Mart is a Motley Fool Global Gains selection. Kimberly-Clark, Coca-Cola, PepsiCo, Procter & Gamble, and Wal-Mart are Motley Fool Income Investor recommendations. Motley Fool Options has recommended a diagonal call position on PepsiCo. Motley Fool Options has recommended a diagonal call position on Wal-Mart. The Fool owns shares of Coca-Cola, Costco, PepsiCo, and Wal-Mart. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Matt Koppenheffer owns shares of Wal-Mart, but does not own shares of any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool’s disclosure policy prefers dividends over a sharp stick in the eye.