'Stubborn' food inflation leaves US shoppers with slim appetite for other goods

Commentary this week from executives at Walmart (WMT.N) and other retailers shows how Americans are shifting their shopping habits and hunting for bargains in the face of the highest inflation in a generation.

At Walmart, the world's biggest retailer by revenue, Americans are still spending but are more "choiceful, discerning, thoughtful" about what they buy, its global Chief Executive Officer Doug McMillon told analysts.

Higher prices on food led to soft sales of electronics, toys, home and apparel in the most recent quarter at Walmart. McMillon said he believed inflation on dry groceries and items made for immediate consumption would remain high "for a while".

The average cost for food consumed at home climbed 11.3% in January from a year earlier, Labor Department data showed.

That was nearly 5 percentage points above the overall rate of inflation, among the widest gaps since the 1970s. Food cost increases have outstripped broader inflation for nearly a year.

"Food inflation has been the most stubborn of all the categories," Walmart's US CEO John Furner said.

Coresight Research predicts annual grocery retail sales will grow by around $500 billion between 2022 and 2030.

Sharp sales declines in categories other than food are forcing retailers like Target (TGT.N) to slash prices on everything from toys to electronics.

"If I were a (US retail) CFO right now, I'd probably have to be talking about the most conservative guide possible," said David Wagner, portfolio manager at Aptus Capital Advisors. The firm holds about $7 million in Walmart shares and recently sold its investment in Target.