Walmart warns US shoppers are cutting spending as higher petrol prices bite

Walmart has warned that higher petrol prices are causing US consumers to cut spending elsewhere as the war with Iran continues to squeeze household budgets. The retail giant expects its sales growth between May and July to slow significantly compared with the previous three months, with higher pump prices to blame.

Data from motoring group AAA shows the average price of a gallon of petrol has hit $4.56 (£3.40), up from $3 when the war began. Walmart finance boss John David Rainey said that the rising cost of living had so far been offset by higher tax returns resulting from tax cuts in President Donald Trump's One Big Beautiful Bill Act (OBBBA). He warned that shoppers would be under increasing strain as that effect wears off in the current financial quarter. Rainey said, "I think higher tax returns muted some of the pressure related to higher fuel prices, and as we're in a period of time right now where those tax refunds are largely not coming in, I think consumers are going to feel more of that pressure from higher fuel prices." Walmart's first-quarter profit, from February to April, was $5.3bn, up 18.8% compared with a year earlier. Sales in the quarter rose by 7.3% on the year to $177.8bn.

On a call with investors, Rainey also warned that if the closure of the Strait of Hormuz continues, it could force the retailer to hike food prices due to shortages of fertiliser, nitrogen and phosphates. The company warned this rate of growth would slow to between 4% and 5% between May and July as the rising cost of living begins to bite. The company's shares fell by 7% on Thursday morning in response to the worse-than-expected guidance.