Walmart, WMT, CEO has said that some Americans are running out of money before the end of the month and turning to smaller pack sizes for consumer goods

Walmart CEO Doug McMillon warned that American consumers are under increasing financial strain as food prices remain stubbornly high.

Speaking to roughly 1,000 executives at the Economic Club of Chicago on Thursday, McMillon noted that some shoppers are running out of money before the end of the month and opting for smaller pack sizes on consumer goods. While prices for items like apparel have returned to near pre-pandemic levels, food costs remain elevated.

Signs of Financial Strain

Walmart is seeing clear “stress behaviors” among budget-conscious customers, McMillon said. “You can see that the money runs out before the month is gone, you can see that people are buying smaller pack sizes at the end of the month.”

Despite these challenges, overall consumer behavior has remained relatively steady over the past year, with shoppers focusing on value and making more selective purchases.

The Pressure of Rising Costs

Higher prices on essentials such as beef, eggs, and fuel continue to pose challenges for retailers like Walmart, which has built its business on offering “everyday low prices.” The company recently projected lower-than-expected profits for the current fiscal year, citing uncertainty around consumer behavior as well as economic and geopolitical conditions.

In January, U.S. inflation surged at its fastest pace since August 2023, with egg prices soaring more than 15% in a single month due to bird flu-related supply disruptions. Year-over-year, egg prices were up 55%, prompting former President Donald Trump to call the situation “a disaster.”

McMillon said Walmart is closely monitoring food prices and working to ease costs for consumers. “If you’re at the lower end of the income scale, you are feeling more frustration and pain because of higher food prices,” he said. “They’ve persisted for years now, and you’re just tired of it. And you want it to get better.”

The Impact of Inflation and Tariffs

Dollar General previously warned that inflation is hitting lower-income consumers especially hard, with a growing number struggling to make ends meet each month.

Meanwhile, the U.S. is on track to import more food than it exports for a third consecutive year, with the agriculture trade deficit expected to reach a record $49 billion in 2024, according to the Department of Agriculture. Walmart, which has long dealt with tariffs, said it has a diversified supply chain to navigate trade challenges.