Nowhere is the bleak reality of persisting US inflation more apparent than Walmart’s earnings. The retail company with a chain of hypermarkets and discount stores across the country yesterday announced a surprise 8% second-quarter growth, defying internal and external projections that predicted revenue loss following the weakening purchasing power of its core customers.
The situation hasn’t changed for many of the company’s primary customers who are still grappling with high costs – of gas, food, and housing – caused by a series of global events including the pandemic, the Russia-Ukraine conflict, and a devastating heat wave rippling across Europe and Asia, causing record fire outbreaks and halting manufacturing.
Walmart’s surprise growth, however, was fueled by a new consumer class: middle and high-income Americans who have also seen their purchasing power cut and are now in search of cheap, discounted items. It’s a textbook example of how an economic crisis can inspire the development of new tastes and alter product preferences.
Despite the growth, the retail company has stuck with its somber second-half outlook, given the persistence of the broader pattern of most consumers cutting their shopping list to include only basic necessities.
To combat inflation, the US government recently passed an ‘Inflation Reduction Act’, although debates remain on whether or not the plans contained in the policy will make any meaningful impact on bringing down inflation.
America’s battle reflects a global challenge, with Europe also preparing for what is expected to be a difficult winter following Russia’s cut of gas supply and soaring energy prices that have motivated a search for firewood, coal, and other rustic methods to keep homes and bodies warm.