Walmart’s top boss has lifted the lid on what Americans can expect for grocery prices next year — and it’s not good news.
CEO Doug McMillon said the cost of a family-owned store – at record highs after four years of rampant inflation – will not fall until 2025.
McMillon said he was “disappointed” with the current level of food inflation, pointing to eggs and dairy as major contributors.
Official figures show supermarket food prices have risen by a modest 1.1 percent year-on-year.
But it comes after prices rose by more than 20 percent in four years. The biggest annual jump occurred in the year to August 2022, when they rose 13.5 percent.
Consumers and retailers both hope that prices will fall from record highs, in what is known as deflation. This is what happened to most goods in the mid-2010s.
McMillan acknowledged that customers are understandably upset as food prices remain “significantly higher” than pre-pandemic levels.
The products that have risen the most recently — eggs and milk, for example — are expected to stabilize faster than dry groceries, McMillon said.
But he warned that processed food prices are unlikely to return to pre-pandemic levels and may see little improvement in 2025.
Analysis of data from the U.S. Bureau of Labor Statistics shows how much grocery prices have risen over the past five years
CEO Doug McMillon said the cost of a family-owned store – at record highs after four years of rampant inflation – won’t fall in 2025
It comes after a separate warning last month from Walmart that told customers that prices on some items could rise if President-elect Donald Trump’s plan to raise tariffs takes effect.
The warning came during the company’s third-quarter earnings results, in which the retail giant posted sales growth of 5.5 percent.
“We never want to raise prices,” Walmart CFO John David Rainey said during the November earnings call.
“Our model is low prices every day. But there will likely be cases where prices for consumers rise.”
Rainey said it was too early to determine which products might be particularly affected.
He added that about two-thirds of the items the big-box retailer sells are made, grown or assembled in the United States.
That means all of these goods would not be subject to the Trump tariffs, which many economists say will reignite inflation.
Experts told it ABC News that electronics, clothing and toys are likely to become the most expensive under an environment of higher tariffs, as most of these items are imported.
Finally falling food prices have hurt the profits of Cargill, America’s largest private company
During his first term, Trump also imposed tariffs, although these started on a much smaller scale than what he is now proposing.
“We’ve been living under a tariff environment for seven years, so we’re pretty familiar with that,” he said. ‘However, rates are inflationary for customers, so we want to work with suppliers and with our own private label range to try to bring prices down.’
But what Trump is putting forward now is starkly different from what he and Biden oversaw during their respective presidencies.
Trump is proposing a 60 percent tariff on all Chinese goods, and a 10 percent tariff on all US imports worth $3 trillion.
A May report from the Peterson Institute for International Economics, a nonpartisan think tank, estimated that these tariffs will cost middle-class families at least $1,700 a year.
Trump’s aggressive trade proposals would cost consumers at least $500 billion a year – or at least 1.8 percent of GDP – according to the institute.
That’s roughly five times the cost of the US-China trade war that Trump started in 2018.
Retail expert Neil Saunders, director of GlobalData, told DailyMail.com that Trump’s tariff proposals would cause “huge headaches” and impose significant additional costs on the retail sector.
“Despite Trump’s claims to the contrary, the tariffs are paid by the companies or entities importing goods and not by the countries themselves,” he said.
‘This means that the cost of buying products from abroad, either directly or as inputs to production, would rise sharply.’
Tariffs could also reignite inflation.
Meanwhile, one of the world’s largest food retail companies said earlier this week it is looking to cut its workforce by five percent as the cost of ingredients stops rising.
The cuts will result in the loss of 8,000 jobs at Cargill’s, which has 164,000 employees.
Walmart has warned customers that prices at its stores could rise thanks to Trump’s new pricing plan
The Minnesota-based agricultural giant plays an important role in the global ingredients market and acts as a distributor of grains, meat and other agricultural products worldwide.
During the pandemic and its aftermath, the company made huge profits as inflation and the war in Ukraine drove up food prices.
However, as food prices have risen more slowly, the company’s profits have taken a hit.
Cargill’s revenues for the fiscal year ending in May fell to $2.48 billion, compared with a record $6.7 billion in 2022 – the lowest profit since 2016, according to Bloomberg.
‘Cargill benefited when food inflation was rampant, but as prices moderate, it is coming under pressure and its bottom line is under pressure.’ retail expert Neil Saunders of Global Data told DailyMail.com.