On Tuesday, Walmart CEO Doug McMillon warned that the effects of inflation will be “with us basically forever” and explained how higher prices are affecting his corporation.
According to a report from the Bureau of Labor Statistics, annual inflation in July was close to the highest level in 41 years. In June, year-over-year inflation set a 41 year high of 9.1%, and in July that number inflation fell slightly to 8.5%.
Over the last year, inflation has caused the real wages of Americans to decrease significantly. According to a separate report from the Bureau of Labor Statistics, “Real average hourly earnings decreased 3.0 percent, seasonally adjusted, from July 2021 to July 2022. The change in real average hourly earnings combined with a decrease of 0.6 percent in the average workweek resulted in a 3.6-percent decrease in real average weekly earnings over this period.”
In an interview with CNBC anchor Courtney Reagan, McMillon explained that Walmart is gaining more consumers as wealthier families struggle with the increased prices.
“It’s a conflicting period in terms of the data. If you look at what’s happening across categories and across income levels, inflation is having an impact particularly for those who don’t have as much money,” McMillon said. “So we see them behaving in different ways … Higher income families are shopping at Walmart because they’re so price sensitive right now. We shared earlier this morning that families making more than $100,000 in household income have driven a lot of our growth during this last quarter.”
“Right around the middle of the first quarter is when we saw food inflation reach a level where behavior started to change,” McMillon added. “It got to a level where people making less than $50,000 household income started behaving differently, and then to the $75,000 level and then to the $100,000 level.”
McMillon then explained that Walmart has raised their employees’ wages in response to inflation, but that has forced them to further raise prices to reflect the increased cost of labor.
“We’ve raised our wages, which we’re happy to do … that creates a new level of which pricing has to be adjusted to reflect,” he said. “So I think there’s some level of inflation that’s going to be with us basically forever. Hopefully we’ll see food inflation in particular improve as we go through next year.”
