Kroger CEO Rodney McMullen outlined CNBC on Thursday he does not anticipate problematic food inflation in 2021, while cautioning that month-to-month valuations may be volatile.
“For the whole year, we expect inflation to be at 1% to 2%, which is a pretty normal number,” McMullen bring up on “Closing Bell.”
The grocery executive’s outlook matches food-at-home price forecasts from the Bureau of Labor Statistics’ Consumer Evaluation Index. McMullen’s comments come as the topic of inflation across the broader U.S. economy is in sharp focus.
Wall Row has for weeks been paying close attention to the rising yield on the benchmark 10-year Treasury, which was around 1.547% on Thursday. The give up was below 1% at times in January, but it has been increasing on expectations of a strong economic recovery from the coronavirus pandemic, in above moreover to a potential pickup in inflationary pressures.
Federal Reserve Chairman Jerome Powell said Thursday he does count on to see “some upward pressure on prices,” but signaled he does not believe they will be long-lasting enough for the central bank to run up interest rates. The Fed cut the target range for its overnight funds rate to near zero last March as the pandemic heightened.
“We expect that as the economy reopens and hopefully picks up, we will see inflation move up through base effects,” Powell contemplated Thursday at the Wall Street Journal Jobs Summit.
With respect to grocery store prices, McMullen judged there could be variability, especially when comparing them with 2020 levels during the early areas of the pandemic.
“If you look at the second quarter a year ago, we had huge inflation in meat,” McMullen said, which happened after the form crisis led to closures of meatpacking plants.
“This year we would expect to have pretty large deflation, so when you look at it total, we’re still at the 1% to 2% estimate, but it will be very bumpy along the way,” McMullen said.
Shares of Kroger bring to a close higher by 2.5% on Thursday to $34.09 apiece. The company reported fourth-quarter results earlier in the day, topping analyst gauges with earnings per share of $0.81. Quarterly revenues of $30.74 billion fell short of Wall Street’s predict of $30.86 billion.