Here is yet another sign that inflation pressures are building. Wal-Mart, Americaโs largest and lowest cost retailer says U.S. consumers will face serious inflation for clothing, food, and other products in the months ahead. If the nationโs low cost leader is planning price hikes, there isnโt a business in America that isnโt going to raise prices. I know this kind of data point doesnโt fit into the Fedโs abstruse economic models, but if Ben B. wants any chance of salvaging the Fedโs waning inflation-fighting credibility, heโd better start paying attention to this type of anecdotal evidence.
Wal-Mart CEO Bill Simon expects inflation
By Jayne O’Donnell, USA TODAY
U.S. consumers face “serious” inflation in the months ahead for clothing, food and other products, the head of Wal-Mart’s U.S. operations warned Wednesdayโฆย
โฆinflation is “going to be serious,” Wal-Mart U.S. CEO Bill Simon said during a meeting with USA TODAY’s editorial board. “We’re seeing cost increases starting to come through at a pretty rapid rate.”ย
Along with steep increases in raw material costs, John Long, a retail strategist at Kurt Salmon, says labor costs in China and fuel costs for transportation are weighing heavily on retailers. He predicts prices will start increasing at all retailers in Juneโฆย
Major retailers such as Wal-Mart are the best positioned to mitigate some cost increases, Long says. Wal-Mart, for example, could have “access to any factory in any country around the globe” to mitigate the effect of inflation in the U.S., Long saysโฆย
Still, “it’s certainly going to have an impact,” Long says. “No retailer is going to be able to wish this new cost reality away. They’re not going to be able to insulate the consumer 100%.”
