Walmart CEO sounds alarm on grocery prices next year- but says there are two items that will drop in price

Walmart CEO sounds alarm on grocery prices next year- but says there are two items that will drop in price

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 shop – at record highs after four years of rampant inflation – will not be coming down in 2025.

McMillon said he was ‘disappointed’ with the current level of food inflation, pointing to eggs and dairy as key contributors. 

Year-on-year, official figures show prices for supermarket food is up a modest 1.1 percent. 

But it comes after prices have jumped more than 20 percent in four years. The biggest annual jump came in in the year to August 2022 when they rose 13.5 percent. 

Consumers and retailers are both hoping prices will come down from record highs, in what would be known as deflation. This is what happened across most goods in the mid-2010s.

McMillan acknowledged that customers are understandably upset – as food prices remain ‘significantly higher’ than pre-pandemic levels.

Items that have gone up the most lately – egg and milk, for example – are expected to stabilize more quickly than dry grocery items, McMillon noted. 

But he warned that processed food prices are unlikely to return to pre-pandemic levels and may see little improvement throughout 2025. 

Analysis of data from the US Bureau of Labor Statistics shows just how much prices have increased for everyday groceries in the last five years

CEO Doug McMillon said the cost of a family shop - at record highs after four years of rampant inflation - will not be coming down in 2025

CEO Doug McMillon said the cost of a family shop – at record highs after four years of rampant inflation – will not be coming down in 2025

 It comes after a separate warning last month from Walmart telling customers that prices of some items could rise if President-elect Donald Trump’s plan to hike tariffs takes effect.

The warning came during the company’s third quarter earnings results, which saw the retail giant post 5.5 percent revenue growth.

‘We never want to raise prices,’ Walmart CFO John David Rainey said on the earnings call in November. 

‘Our model is everyday low prices. But there probably will be cases where prices will go up for consumers.’

Rainey said it was too soon to determine which products in particular could be 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 those goods wouldn’t be subject to the Trump tariffs, which many economists believe will reignite inflation.

Experts told ABC News that electronics, clothes and toys will likely become the most expensive under an elevated tariff environment since most of these items are imported. 

Food prices finally coming down has hit profits at Cargill, which is America’s largest private company

In his first term, Trump also implemented tariffs, though they started off at a much smaller in scale than what he is proposing now.

‘We’ve been living under a tariff environment for seven years, so we’re pretty familiar with that,’ he said. ‘Tariffs, though, are inflationary for customers, so we want to work with suppliers and with our own private-brand assortment to try to bring down prices.’

But what Trump is floating now is entirely different from he and Biden oversaw during their respective presidencies.

Trump is proposing a 60 percent tariff on all Chinese goods, and a 10 percent ‘across-the-board’ tariff on all $3 trillion worth of US imports. 

A May report from the Peterson Institute for International Economics, a non-partisan think tank, estimated that these levies 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 is roughly five times the cost of the US-China trade war Trump kicked off in 2018. 

Retail expert Neil Saunders, managing director of GlobalData, told DailyMail.com that Trump’s tariff proposals would cause ‘an enormous headache’ and add significant additional cost for retail.

‘Despite Trump’s assertions to the contrary, tariffs are paid by the companies or entities importing goods and not by the countries themselves,’ he said. 

‘This means the cost of buying products from overseas, whether directly or as an input for manufacturing, would rise sharply.’ 

Tariffs could also jumpstart inflation again.

Meanwhile, earlier this week that one of the world’s largest food trading companies said it is cutting five percent of its workforce – as ingredient costs have stopped rising,

The cuts will see Cargill’s, with 164,000 employees, shed 8,000 jobs. 

Walmart has warned customers that prices at their stores could go up thanks to Trump's new tariff plan

Walmart has warned customers that prices at their stores could go up thanks to Trump’s new tariff plan

The Minnesota-based agricultural giant plays a major role in the global ingredients market, acting 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 Ukraine war drove up food prices. 

However, as grocery prices have risen less slowly, the company’s profits have taken a hit.

Cargill’s earnings for the fiscal year ending in May fell to $2.48 billion, down from a record $6.7 billion in 2022 – its lowest profit since 2016, according to Bloomberg. 

‘Cargill profited when inflation was rampant in food, but now prices are moderating it is coming under pressure and its bottom line is being squeezed.’ retail expert Neil Saunders, from Global Data, told DailyMail.com. 

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