Walmart CEO Doug McMillon predicted an end soon to the punishing inflation Americans have been seeing at the grocery store—good news for shoppers looking for a respite from their grocery bills, but potentially bad news for the economy at large if it goes too far.
During an earnings call Thursday, McMillon said “we may be managing through a period of deflation in the months to come” in the U.S.
He said while beef prices are high, the company is starting to see prices on eggs, dairy, chicken and seafood come down.
He also thinks the company and economy at large will experience deflation for dry groceries and consumables.
In the period of post-pandemic inflation, groceries have had some of the largest price increases, rising 24% since the pandemic began, according to the Federal Reserve. However, that inflation has been slowing. Since January, there’s only been 2% price rise for groceries. Inflation across the board is also decreasing. In November, it fell to its lowest since September 2021 at just 3.2% on an annual basis.
Many economists warn that prolonged severe deflation could have major negative consequences on the economy at large. Deflation can cause a rise in unemployment as employers are earning less money to pay employees, an increase in interest rates as the real value of debt worsens and potentially a recession as these prices push down production, wages and demand, according to the Corporate Finance Institute.
With around $500 billion in U.S. sales in 2022, Walmart is the largest retailer in the U.S., according to the National Retail Federation. Groceries are expected to make up more than half of those sales.
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