Walmart CEO says inflation and ‘higher prices are kind of with us’ but there’s hope for shoppers who want cheaper items

WALMART recently enjoyed better-than-expected sales figures – now the company’s CEO explained that the country’s inflation problems are also better than expected.

Walmart CEO Doug McMillon told a Goldman Sachs retail conference that he believes inflation in the U.S. should not lead to a massive economic downturn.

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The CEO said he expects grocery store prices to be slightly lower in 2024.

However, he does not believe they will return to pre-pandemic levels.

Walmart is coming off a torrid quarter in which the brand saw a massive increase in consumer demand for groceries and e-commerce.

The CEO expects now-inflated prices to continue to prevail in the U.S. economy, but said an economic downturn is not likely.

“Inflation and higher prices are kind of our thing,” McMillon said of the locked-in prices.

“We will see disinflation, but not all the way back to deflation.”

McMillon reiterated the company’s tremendous growth in food sales, poor numbers in discretionary spending.

Changing consumer behavior is leading to higher prices in certain segments.

“What we have seen in recent years has resulted in dry food [and] “Consumables have a pretty high two-year stack inflation number, and that’s coming down a little bit, but not much,” McMillon said.

“BETTER THAN I EXPECTED”

McMillon and Walmart faced massive headwinds from the coronavirus lockdowns.

Rising gasoline prices, excess inventory and employment difficulties have been a headache for the brand in 2022.

But McMillon said the economic response to the problems appeared to have mitigated any potential spasms.

“Things are going better in the US than I would have expected at the beginning of the year,” he said.

“I was concerned about the level of inflation in categories like dry foods [and] Consumables – how that would impact discretionary purchases.”

McMillon said the company is focused heavily on addressing inventory and supply chain issues.

“I’ve been doing this for more than 32 years now and have never seen an opportunity to transform the supply chain as fundamentally as the one that’s right in front of us,” he said.

His comments came a day before the Federal Bureau of Labor Statistics released the latest consumer price index figures.

INFLATION FIGURES

Rising gas prices weighed on consumers across the board last month, as gas prices pushed up the cost of goods by 3.7 percent in August.

August was the second consecutive month of rising inflation after several months of falling prices.

In December 2022, inflation rates rose to 6.5 percent.

However, core inflation – a measure that excludes volatile food and energy prices and is closely watched by economists who say it better reflects movements in the net economy – continued its downward trend.

The latest inflation numbers were the last before the Fed set new interest rates.

Economists expect national interest rates to stay the same after successive hikes, providing relief to consumers seeking to finance larger investments.

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