Catenaa, Thursday, May 21, 2026- Walmart signaled Thursday that it may raise retail prices in the coming months to compensate for soaring fuel costs as a result of the Iran war.
The big-box retailer reported overall positive first-quarter earnings. Revenue rose 7.3% to $177.8 billion, and US same-store sales grew 4.1%, thanks in part to e-commerce and revenue from membership fees.
But spiking fuel prices took a big bite out of Walmart’s profits. The company said it absorbed $175 million in higher-than-planned fuel costs over the quarter.
“These are real impacts to cost of goods sold for us and our suppliers,” Walmart’s chief financial officer, John David Rainey, said on a call with Wall Street analysts Thursday. “If the current elevated cost environment persists, we’d expect somewhat higher retail price inflation in Q2 and the second half of the year.”
Walmart also issued guidance to investors for the second quarter that fell short of expectations, according to a survey of analysts by the London Stock Exchange Group. Walmart shares fell more than 7% Thursday morning.
As the nation’s largest private employer and one of its biggest retailers, Walmart’s quarterly earnings offer a window into how the US economy and consumers are doing. Its latest report points to a consumer under pressure, especially as soaring fuel costs ripple through the economy.
Regular gas averaged $4.56 per gallon nationwide on Thursday, far higher than the $2.98 average right before the war, according to AAA. Diesel averaged $5.66 per gallon, up around $2 since the start of the Iran war.
Those prices are putting extra pressure on already-strained American consumers.
“The high-income customer is spending with confidence in many categories, while the lower-income consumer is more budget-conscious and perhaps navigating financial distress,” said Rainey.
Some consumers, he said, are changing their gasoline habits.
“The number of gallons that customers fill up with when they come to our fuel stations fell below 10 for the first time since 2022,” said Rainey. “That’s an indication of stress.”
In April, consumer prices jumped 3.8%, outpacing wage growth for the first time since 2023. Economists said much of that rise was due to soaring fuel costs.
The hit to Americans’ wallets could worsen: Economists warn we have yet to feel the full economic effects of the war.
Higher-than-usual tax refunds might’ve also alleviated some of the strain. But now that this cushion is over, “Consumers are going to feel more of that pressure from higher fuel prices,” Rainey said in an interview Thursday with CNBC.
Walmart’s earnings come just one day after Target reported that its first-quarter net sales rose more than 6% over last year.
Helmed by a new CEO, Target is looking to turn around years of declining sales, with some consumers expressing frustration over what they said were disorganized stores and rollbacks of the company’s diversity, equity, and inclusion initiatives.
