Kroger CEO Rodney McMullen told CNBC on Thursday that he did not anticipate troubled food inflation in 2021, while warning that month-to-month prices could be volatile.
“For the whole year, we expect inflation to be 1% to 2%, which is a pretty normal number,” McMullen told Closing Bell.
The perspectives of the food executive are in line with the forecasts of home prices from the consumer price index of the Bureau of Labor Statistics. McMullen’s comments come as the topic of inflation in the entire American economy is in the spotlight.
For weeks, Wall Street has been paying close attention to the Treasury’s 10-year benchmark yield, which was around 1.547% on Thursday. The yield was sometimes below 1% in January, but rose in anticipation of a strong economic recovery from the coronavirus pandemic, in addition to a potential rise in inflationary pressures.
Federal Reserve Chairman Jerome Powell said Thursday that he expects to see “upward pressure on prices,” but said he did not think they would last long enough for the central bank to raise interest rates. The Fed reduced the overnight target rate target to near zero in March last year as the pandemic intensified.
“We expect that as the economy reopens and hopefully grows, we will see inflation rise through base effects,” Powell said Thursday at the Wall Street Journal Jobs Summit.
Regarding grocery prices, McMullen said there could be variability, especially when compared to 2020 levels in the early parts of the pandemic.
“If we look at the second quarter a year ago, we had huge inflation in the meat,” McMullen said, following the health crisis that led to the closure of meat packing plants.
“This year we would expect to have a fairly high deflation, so when we look at it in general, we are still estimating from 1% to 2%, but it will be very rugged along the way,” McMullen said.
Kroger shares closed 2.5 percent on Thursday, up $ 34.09 a piece. The company reported fourth-quarter results early in the day, beating analysts’ estimates with a earnings per share of $ 0.81. Quarterly revenue of $ 30.74 billion fell compared to Wall Street forecasts of $ 30.86 billion.