Walmart Warns That Rising Gasoline Prices are Suppressing US Consumer Demand

Walmart has sounded a warning that elevated and rising gasoline prices are putting pressure on consumers, and, as a result, U.S. shoppers are expected to reduce their spending on consumer goods. Household budgets are feeling the pinch of higher fuel prices, and shoppers could be forced to cut their spending on other items in order to cope with elevated fuel prices, Walmart says.

Walmart expects its sales growth to slow down significantly in the quarter May–July due to higher fuel prices.

The Middle East conflict between the United States and Israel on one side and Iran on the other has triggered a surge in global crude oil prices. As a result of the shipping disruptions and conflict, gasoline and diesel prices have risen in the U.S.

Data shows that a gallon of gasoline has spiked from $3 before the war to an average of $4.56. In some states like California, fuel prices are a lot higher than this national average.

John D. Rainey, the finance chief at Walmart, told CNBC that at the moment, the effect of the high cost of living is being cushioned by the tax returns that were issued in light of the cuts included in Trump’s Big Beautiful Bill. However, tax returns are ebbing and households will face the full brunt of the high cost of living in the coming quarter and beyond.

Rainey says Walmart will be monitoring gas prices at fuel pumps to analyze how any changes impact shopping behavior in the U.S. over the next few months.

Walmart released its earnings report for the just-ended quarter, and the retail giant recorded an 18.8% jump in profit when compared to the same quarter last year. Profits stood at $5.3 billion, but the company warned that growth is likely to drop to approximately 4–5% in the current quarter due to hikes in fuel prices.

The retailer said it may be compelled to increase food prices in the near term if the Strait of Hormuz isn’t reopened to commercial shipping. Nitrogen, phosphates and other fertilizers transit through this strait on their way to America and other international markets. Shortages of these supplies have triggered price increases and those added costs are likely to be passed on to consumers.

Markets immediately responded to Walmart’s cloudy outlook for sales over this quarter and shares of the retail giant slipped 7%.

For companies like Berkshire Hathaway Inc. (NYSE: BRK.A) (NYSE: BRK.B) with extensive holdings in the retail sector, the disruptions due to the Iran war are something to watch as they could impact the performance of the firms in which they hold stock.

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