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Walmart CEO Talks Consumer Spending, Inflation Predictions

Inflation is on course to keep declining, but food prices are unlikely to return to their levels from two years ago, Doug McMillon said at an investor conference.

Grocery inflation to on track to continue coming down during the coming months, but food prices are unlikely to return to their levels from two years ago, Walmart President and CEO Doug McMillon said Tuesday during Goldman Sachs’ 30th annual Global Retailing Conference.

“Inflation and higher prices are kind of with us. We’ll see disinflation, but not all the way back to deflation … certainly not in the short term,” McMillon said, adding that he would like to have lower prices faster for consumers.

“What we’ve seen over the last few years has resulted in dry grocery/consumables having a pretty big two-year stack inflation number and that’s coming down a little bit but not a lot,” McMillon said.

McMillon’s comments came a day prior to the Consumer Price Index data for August, which was released Wednesday by the U.S. Bureau of Labor Statistics, and showed that food-at-home prices during the month increased at a 3% annual pace while overall inflation rose to 3.7%.

On the consumer behavior front, McMillon said that the job market, wage increases and some pockets of disinflation have helped spending.

“In the U.S. things are better than I would have expected them to be when we started the year,” he said. “I was concerned about the amount of inflation in categories like dry grocery, consumables [and] how that would impact discretionary purchases.”

Walmart’s comparable sales growth of 6.4% in its second quarter was driven by grocery and health and wellness with an offset by softness in general merchandise.

For shoppers with constrained budgets, the retailer has seen behavioral changes, like switching to private brands, to alleviate pressure on their wallets. Walmart’s ability to attract customers across income cohorts “has improved our situation,” McMillon said. 

The retailer’s strong results at the end of its second quarter and the back-to-school season indicate it will have well-performing holiday sales, McMillon said. He added that Walmart is confident about its ability to maintain price gaps as it manages the cost increases and decreases it sees from suppliers.

Walmart’s prices will likely be slightly lower in 2024 than this year but higher than two years ago, McMillon said, noting that the retailer’s price gaps are “in a healthy place.”

Inventory management and increasing productivity with its supply chain are top priorities for Walmart, he added. 

“I’ve been doing this now for more than 32 years, and I’ve never seen an opportunity to step change the supply chain like the one that’s right in front of us,” McMillon said. 

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