Walmart says prices will fall – except in one key area – NBC New York

• Walmart said inflation was unchanged last quarter and that sales growth was not due to higher prices but to higher-value items and more visits to its stores and website.
• However, prices remained high in some areas of the store, such as dry goods and processed foods.
• The prices of consumer goods brands, including Walmart, have come under increased scrutiny from both consumers and politicians.

According to CEO Doug McMillon, prices for many groceries and other items at Walmart have fallen.

But the head of the country's largest retailer said Thursday that inflation was “more stubborn” in one particular part of the store: the dry goods and processed food aisles, which include products such as carbonated soft drinks.

In a call after the discount retailer reported its second-quarter results, he said Walmart has put pressure on its suppliers that stock its shelves to lower prices, while urging those companies to do more.

“The upward pressure is less, but there are some who still talk about cost increases and we are aggressively resisting that because we believe prices need to come down,” he said.

Walmart's headline inflation was unchanged in the quarter and sales growth came from selling more units rather than charging higher prices, Chief Financial Officer John David Rainey told CNBC.. However, price dynamics were not uniform across all products: prices for dairy products, eggs, sugar and meat continued to rise, while they stagnated or fell for items such as pet food, apples, potatoes, strawberries, sporting goods and lawn and garden products.

Walmart's quarterly results sparked a rally in other retail stocks on Thursday, including Target, Best Buy and Macy's. Both the discount retailer's results and better-than-expected retail sales figures refuted fears of a consumer slowdown.

Walmart beat expectations on sales and profit and raised its forecast to reflect a stronger first half. Rainey told CNBC that consumers remain “picky and demanding.” [and] However, the company management is of the opinion that this does not pose an additional risk to the health of consumers.

All consumer goods brands, including Walmart, have been under increased scrutiny from shoppers and even politicians for some time as frustration over higher-priced goods continues – and McMillon’s comments about Walmart’s suppliers underscore just how much pressure grocers are under. Walmart pulled TikTok has been criticized for introducing electronic price tags for store shelves. Some users claim the company will use the technology to raise prices when demand increases. (Walmart, for its part, has said it has no plans to change its approach to pricing and has added the new price tags to save store employees time.)

Many brands are making an effort to highlight added value or launch new offerings, especially as consumers become more selective about what they spend their money on.

McDonald's, for example, introduced a $5 menu in late June and decided to expand the offer in most markets. Target said in late May: This would reduce prices on about 5,000 commonly purchased items such as peanut butter, milk and meat throughout the summer.

Walmart is also promoting discounts. The retailer said there were 7,200 “rollbacks” (what it calls short-term deals) across all categories in the quarter ended July 31. That figure includes a 35% increase in grocery discounts compared to a year ago.

While Walmart's profits are growing faster than sales, McMillon says that's due to growth outside of retail in higher-margin business areas like advertising – not higher product prices.

“We're not raising prices. We're lowering them,” McMillon said. “We don't want product margins to increase. When we talk about margin improvement in our company, it's about the mix of business.”