Kroger CEO Rodney McMullen told CNBC on Thursday that he does not anticipate problematic food inflation in 2021, warning that monthly prices could be volatile.
“For the whole year, we expect inflation to be between 1% and 2%, which is a pretty normal figure,” McMullen told Closing Bell.
The grocery executive’s outlook coincides with the home price index of the Labor Statistics Office’s consumer price index. McMullen’s comments come as the issue of inflation across the U.S. economy is focused on a strong focus.
Wall Street has been paying close attention to the 10-year benchmark Treasury yield for weeks, which was around 1.547% on Thursday. Yield was below 1% of times in January, but has been rising in line with expectations of a strong economic recovery from the coronavirus pandemic, as well as a potential recovery from inflationary pressures.
Federal Reserve Chairman Jerome Powell said Thursday he expects to see “some upward pressure on prices,” but noted that he doesn’t think they are lasting enough for the central bank to raise interest rates. The Fed reduced its overnight fund rate target range to near zero last March as the pandemic intensified.
“We hope that as the economy reopens and we expect it to recover, we will see inflation rise through the base effects,” Powell said Thursday at the Wall Street Journal Jobs summit.
Regarding grocery store prices, McMullen said there could be variability, especially when compared to 2020 levels during the early parts of the pandemic.
“If we look at the second quarter of last year, we had huge meat inflation,” said McMullen, who passed after the health crisis led to the closure of meat packaging plants.
“This year we would expect to have a pretty big deflation, so if you look at it overall, we’re still at the estimated 1% to 2%, but it’s going to be very bumpy along the way,” McMullen said.
Shares of Kroger closed up 2.5% on Thursday, to $ 34.09 per piece. The company reported fourth-quarter earnings earlier in the day, beating analysts ’estimates with a earnings per share of $ 0.81. Quarterly revenue of $ 30.744 billion was lower than Wall Street forecasts of $ 30.86 million.