Walmart CEO says food deflation may come soon

By Nathaniel Meyersohn, CNN

Published 10:49 AM EST, Thu November 16, 2023

New York

CNN

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Lower grocery prices may soon be coming for shoppers.

Walmart CEO Doug McMillon said Thursday that the US food industry may be heading into a period of deflation after three years of punishing price hikes that have caused sticker shocker for shoppers at the grocery store. Food prices have increased 25% since the pandemic started.

“We may see dry grocery and consumables start to deflate in the coming weeks and months,” McMillon said. Walmart could enter “a deflationary environment.” Walmart is the largest retailer in the United States, and groceries make up more than half of its sales.

The pace of food inflation has slowed in recent months, but food prices are mostly still going up.

Food prices rose 3.3% annually in October from a year ago, according to the latest reading from the Labor Department. But prices on some staples such as bacon, seafood and eggs have dropped.

Prices on appliances, phones, airline tickets and toys have all dropped, according to the Labor Department.

Deflation would be welcome news for shoppers because it means lower prices. But it could be dangerous for the economy.

Falling prices can indicate weak demand, and consumer spending is a big portion of the economy.

If you think prices will go down in the future, you may delay making a lot of purchases today. When many people start to think that way, people spend a lot less money. That causes employers to lay off workers and can put an economy into a recession.

It’s also a lot harder for central banks to get an economy to grow if it slips into a period of deflation versus inflation. The Federal Reserve has been raising interest rates to cool the economy down.

There is an important paragraph I want to make sure everyone reads as it will impact the economy and our customers. Deflation is not good for an economy as people put off spending as they wait for for these price drops.

People can't afford groceries so they cut back. Not true deflation. Market forces at work. What we have now is STAGflation. The only reason why it is still an employees market is bc the current regime got rid of the work requirement to get welfare.

Up 25%? Sounds low.

Unemployment? 1. There is a workforce shortage. Plenty of jobs available. 2. WalMart has already reduced workforce out of necessity - anyone see a cashier lately?

Shoppers have already been holding back on purchases. Nothing new here. Curious to see what happens this holiday season.

Scott, that right there is funny. Sadly it is true as well in most cases.

Going in to Meijer they have two sections for self checkouts. Either six or eight spots per. One person at each section help out or scan for booze.

Then twenty some empty registers between. One open with an overworked cashier. You would think they can't get employees but then you see a lot of mid-management types standing around chit chatting because people stay in the food lines like they are in Russia.

Nobody cares. Upper management looks good because they don't have the expenses and still make the sales.