Walmart Executives Predict How Long ‘Stubborn’ Food Inflation Will Last

Ben ZeisloftFebruary 22, 2023

Walmart On Tuesday, investors called executives to discuss the possibility of food shortages. Inflation For the foreseeable future, it will be constant.

Although headline inflation statistics fell from 9.1% to 6.4% between June 2022 and January 2023, an increase of food prices was a major concern for households struggling to make ends meets, according to recent research. Data The Bureau of Labor Statistics. The cost of food at your home increased 11.3% in January 2022 to January 2023 while the cost of food away rose 8.2%.

An analyst questioned John Furner, Walmart U.S. Chief Executive Officer, and Douglas McMillon Walmart CEO during the fourth-quarter of the grocery chain’s financial year. Earnings call How much the company expects food inflation trends to worsen relative to other product types. Furner stated that food inflation was a problem. “has been the most stubborn” driver of high price levels and noted only “a little bit” In the last few months, it has fallen. “We would have hoped and expected it to have come back more than it has going into this year,” He replied.

McMillon said that dry groceries and consumables are the most popular. “stubborn” Moreover, he stated that the inflationary pressures within these categories would be “be with us for a while.” He said that future nominal disinflation would still cause price increases comparable to previous years.

“You’ll probably hear inflation numbers that start to sound lower, but you’ll have to remember that’s on a two-year stack,” McMillon continued. “So if inflation in dry grocery and consumables is only 3% or 5%, that’s on top of 15%. And that’s still a problem for the customer and still a pressure to their wallet.”

Over the past two decades, inflation has steadily eroded purchasing powers. This has led to some households being forced to purchase less. Fund They are more likely to have savings than they are to incur debt. A Gallup poll revealed that approximately 50% of respondents were satisfied with their consumption. Survey They are now financially less fortunate than one year ago. 35% think they are better off financially, which is the worst result since 2008’s economic crash.

One week after President Joe Biden, the Bureau of Labor Statistics released its most recent price level report. That “inflation is coming down” During his second State of the Union speech. “Inflation has been a global problem because of the pandemic that disrupted supply chains and Putin’s war that disrupted energy and food supplies,” He agreed. “But we’re better positioned than any country on Earth.”

McMillon has been previously Walmart is gaining from households who previously shop at more expensive grocery shops. “Higher income families are shopping at Walmart because they’re so price sensitive right now,” He made the comment last year. “Families making more than $100,000 in household income have driven a lot of our growth during this last quarter.”

McDonald’s CFO Ian Borden likewise Announced Last month, new customers were attracted to the relatively cheaper offerings of the fast-food restaurant chain. “We can actually look at what is our share amongst low-income consumers; we’re gaining share right now among low-income consumers. And that goes back to the fact that we are positioned as the leading brand in terms of value for money and affordability,” During the company’s third quarter, he stated these words. Earnings call. “To the degree that we end up in a more challenging economic environment in 2023, that’s going to be helpful to our business trends.”