On Tuesday morning CEOs of major US corporations including Walmart, JP Morgan and General Motors appeared in an interview, on CNBC, where they spoke of their outlook for the year 2023. They mentioned issues such as inflation and interest rates as well as geopolitics and other factors that could bring a slowdown in consumers spending.
In the interview on CNBC, Walmart CEO Doug McMillon said that they had “some customers who are more budget conscious that have been under inflation pressure now for months.” He questioned, “Should the Fed do what it needs to do, even if it is a much harder landing than we’d like? I think inflation needs to be dealt with.”
McMillon also that prices have come down on certain categories such as “toys, sporting goods, apparel.” He said that the company was still inflated but not as much as in other categories.
The Bureau of Labor Statistics released data that showed that toy prices increased by 3.1 percent in October, annually while sporting goods increased by 3 percent. Apparel saw a slightly higher rise at 4.1 percent. However, all the three categories were below the overall inflation rate of 7 percent.
These categories are also seeing a slower rise in prices as retailers have excess inventory. Due to a misjudgment between supply and demand, these items are being heavily discounted so that the retailers can clear piled up stock. Promotions in these categories are also increasing to entice customers to buy items from these discretionary categories.
Walmart is the largest retailer in the nation. It offers a wide range of products and this makes it possible for the big box retailer to accurately report on consumer behavior and spending.
Walmart CEO Doug McMillon also mentioned that packaged foods were seeing the highest inflation and this is expected to remain high in the coming months and could be in double-digits. He also mentioned that many customers were switching to the in-store brands of grocery items of Walmart as they were cheaper than other brands.