Walmart has warned that US shoppers are spending less on items other than fuel. This is happening because petrol prices have gone up significantly. The retail giant expects its sales growth to slow down between May and July. This is a noticeable change from the previous three months.
The main reason for this slowdown is the rising cost of petrol. A conflict with Iran has caused oil prices to jump. This has pushed up the price Americans pay at the pump. Data shows the average price for a gallon of petrol is now $4.56. This is much higher than before the conflict began.
Higher tax returns had helped Americans manage these rising costs. However, these benefits are now fading. Walmart’s finance boss, John David Rainey, explained this. He stated that as tax refunds stop coming in, consumers will feel the pinch of higher fuel prices more. This is a direct economic impact on households. Walmart is watching fuel prices closely. They expect them to stay high for a while.
Walmart is a massive company. It is the largest employer in the US. Its sales figures give important hints about how ordinary Americans are coping. The company also warned that disruptions to shipping routes could lead to higher food prices. This is because supplies of important ingredients like fertiliser might become scarce.
In the first quarter of the year, Walmart’s profit was $5.3 billion. This was an increase of 18.8% compared to the year before. Sales also grew by 7.3% in the same period. But the company now expects growth to be between 4% and 5% in the next quarter. This is a clear signal that consumer spending power is weakening.
These predictions caused Walmart’s share price to drop by 7% on Thursday. Analysts say this shows how fuel prices directly affect what people can afford to buy. Consumers facing higher fuel bills will likely seek out cheaper options. Walmart is known for offering good value, which might help it navigate this period. The company’s performance is a key indicator for the wider US economy.