Making sense of Simon’s inflation comment

When Walmart executives speak about prices, inflation or the nation’s economic condition their comments create quite a stir, and that’s what we saw again this week when Bill Simon spoke to USA Today.

As president and CEO of Walmart’s U.S. stores division Simon has a unique perspective on consumer spending and the rising input prices that are impacting the company’s suppliers. Therefore, when he talked to the USA Today editorial board about how the months ahead will bring serious inflation in food and clothing, people pay more attention than they do to the other retailers and economists who have made similar comments in recent months.

Simon talked about leveraging the company’s scale and working closely with suppliers to manage costs, both familiar themes at Walmart, reading between the lines it is apparent Walmart will be among the growing ranks of retailers who will need to pass price increases through to consumers in order to maintain profits. And even though he didn’t directly say Walmart would be raising prices, the company’s competitors will surely infer as much, which is welcome news for those who tend to base pricing decision off of where Walmart is at and can now anticipate somewhat of a rational pricing environment through the summer.