Inflation and equity performance (2017 AM mock Q27)

Q27 of am mock states when inflation is below average, u.s. equity outperform… this drives me nuts - was equity a good inflation protection (thus increase when inflation and reduce when deflation)? I thought when inflation is high, equity and real estate outperform, but bonds perform poorly. Is this right?

thx

Alright, so equities are usually a good inflation hedge (to the extent that a company can pass on the price/cost pressure that it faces to its final customers, so hyperinflation is obviously bad). However when inflation is low, it makes earnings more meaningful as they are more “real”. Low inflation results in higher P/E ratios, since earnings are more real and less subject to interpretation (i.e. is the growth in the company’s bottom line real or attributed to inflation).

Hmmm, but this has nothing to do with the question here. In short, the main question is among equity, bonds, real estate, which will outperform in higher inflation and which in lower inflation? Can anyone help?