Wal-Mart CEO: ‘Serious, Rapid’ Inflation Will Send Prices Soaring

Bill Simon (Getty Images photo)

by Greg Brown, Money News: The one retailer prepared to cut costs to the bone to save money for consumers now warns that prices will rise very soon — no matter what. Retailers have generally managed to hold prices low despite rising raw materials costs. They had little choice: High U.S. unemployment and lack of credit has kept people out of stores. That’s over, says Wal-Mart CEO Bill Simon. Prices will now rise across the board for all retailers, Wal-Mart included. He called the situation “serious.”

"We're seeing cost increases starting to come through at a pretty rapid rate," Simon told USA Today in a meeting with the newspaper’s editorial board.

Consumer prices rose by 0.5 percent in February, while core inflation — minus food and energy — was up 0.2 percent. Consumer confidence fell by a sharp 8.6 points in March, reports The Conference Board, after climbing in February, in part on expectations of coming inflation.

Wal-Mart will try to keep things under control, Simon says. "We're in a position to use scale to hold prices lower longer ... even in an inflationary environment," he told USA Today. "We will have the lowest prices in the market."

That might be, but the prices for most goods could rise at nearly all stores, so Wal-Mart’s efforts would end up relative to an across-the-board increase in the cost of living. Driving the inflation debate is a difference among monetary policymakers regarding inflation. That discussion centers on the ideas of “headline” versus “core” inflation. . . . [Read Greg Brown's Full Analysis of Inflation and Price Increases]

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