Walmart CEO Doug McMillon has suggested that deflation could be on the horizon, noting a drop in prices for general merchandise and key grocery items such as eggs, chicken, and seafood. However, Walmart is approaching this cautiously, recognizing that customers are still mindful of their spending.
Prices have declined, particularly in general merchandise and some essential grocery items, as stated by McMillon. The retailer expects even the more persistent high prices, like those for pantry staples, to start deflating in the coming weeks and months. McMillon, during the company’s earnings call, expressed that although deflation might increase pressure on unit sales, it is ultimately beneficial for customers.
For more than a year, consumers have faced inflation at nearly four-decade highs, impacting the cost of essentials, including groceries, rent, and utilities. McMillon’s remarks echo recent government reports and other retailers’ statements, suggesting some relief for consumers weary of inflation. According to the latest consumer price index report from the Labor Department, inflation was flat month-over-month, with core CPI hitting a two-year low. Home Depot CFO Richard McPhail also commented on an earnings call that “the worst of the inflationary environment is behind us.”
Even the cost of Thanksgiving dinner is expected to be lighter on Americans’ wallets compared to last year. The American Farm Bureau Federation predicts that the average dinner for 10 people will cost $61.17, down 4.5% from last year’s record high.
Inflation has been a significant challenge for retailers, including Walmart. Despite beating Wall Street’s sales and earnings expectations for the fiscal third quarter, the retailer felt the impact of persistent inflation. CFO John David Rainey told CNBC that customers have been waiting for items to go on sale before making purchases, such as holding out for Black Friday deals.
However, inflation hasn’t completely eased yet. Across various categories, Americans are still paying more for the same items, as per the latest CPI numbers. At Walmart, grocery prices have increased by a mid-single-digit percentage from last year but remain significantly higher compared to two years ago.
McMillon pointed out that some food prices continue to be a concern. He stated, “The pockets of disinflation we are seeing are helping, but we like to see more, faster.”
See first source: CNBC
FAQ
Q1: What did Walmart CEO Doug McMillon say about the possibility of deflation?
A1: Doug McMillon suggested that deflation might be coming, noting a decrease in prices for general merchandise and essential grocery items.
Q2: How is Walmart reacting to the changing economic conditions?
A2: Walmart is cautious, recognizing that customers are still watching their spending closely, even with the potential for deflation.
Q3: What trends in prices did McMillon observe?
A3: McMillon noted a decline in prices for general merchandise and key grocery items, with an expectation that higher prices for pantry staples might also start to deflate in the coming weeks and months.
Q4: What impact did inflation have on consumers over the past year?
A4: Consumers faced inflation at nearly four-decade highs, which drove up the cost of essentials like groceries, rent, and utilities.
Q5: Are there any signs of relief for inflation-weary consumers?
A5: Yes, recent government reports and statements from other retailers, including Walmart, suggest some relief, as indicated by flat month-over-month inflation and a two-year low in core CPI.
Q6: What are the expected costs of Thanksgiving dinner this year compared to last year?
A6: The American Farm Bureau Federation estimates that the average cost of Thanksgiving dinner for 10 people will be $61.17, a 4.5% decrease from last year.
Q7: How has Walmart been affected by inflation?
A7: Walmart faced challenges due to inflation but still surpassed sales and earnings expectations. The company observed that customers have been waiting for sales before making purchases.
Q8: Are grocery prices at Walmart still elevated?
A8: Yes, grocery prices at Walmart have increased by a mid-single-digit percentage compared to last year and are significantly higher compared to two years ago.
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