Walmart says inflation was stickier than expected in latest quarter

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Walmart said prices for some of its products did not decline as much as it had anticipated during the most recent quarter, reflecting the sticky inflationary environment in the US that is prompting investors to reassess when the central bank will start cutting interest rates.

Chief executive Doug McMillon said in November that the world’s largest retailer could find itself “managing a period of deflation” in early 2024, in what may have been an encouraging sign for the broader economy given Walmart’s reputation as a consumer bellwether.

McMillon said on Tuesday that Walmart’s general merchandise category in its US operations was “there” in terms of a “deflationary position”, but in the three months to January, “the slope of the decline softened”.

General merchandise prices were lower than a year ago, he told analysts, “but not as much as the trend line would have suggested” at the end of the preceding quarter. Prices for food and consumables were “slightly higher than a year ago”, he added.

McMillon’s comments come a week after official data showed inflation in the US eased less than expected during January, prompting investors to scale back bets that the Federal Reserve would begin easing monetary policy as soon as May.

Eggs, apples and deli snacks cost less than they did 12 months ago, McMillon said, but prices for asparagus, blackberries, paper goods and cleaning supplies were up.

Having been burdened by rising prices across the economy for several years, bargain-hunting consumers — and even higher-income households — remain on the lookout for deals. Customers had “immediately responded” to Walmart’s moves to lower the price of a rotisserie chicken by $1 and “roll back” the price of French bread to $1, said chief financial officer John Rainey.

Walmart reported strong quarterly sales and revenue,…