The blog regards Wal-Mart and other major retailers as excellent leading indicators of trends in the wider economy.
It was therefore concerned to see CFO Tom Schoewe reporting today that Wal-Mart continues to “operate in a very challenging economy“, where the key driver is to provide “the lowest prices to our customers around the world.”
US CEO, Eduardo Castro-Wright, added that US same-store sales were actually down 0.4% versus 2008. He said the decline was “driven by price deflation that was well beyond what we had expected, across many food categories, as well as electronics.”
This deflation is occurring at a time when oil prices have doubled since the start of the year. It suggests that chemical companies and polymer convertors will have a tough task pushing through price increases, especially as Wal-Mart expect price deflation to continue into Q1.