Target, Walmart, and Aldi Cut Prices But Inflation is Not Improving

By: Alyssa Miller | Published: Jun 21, 2024

Major retail stores, like Walmart, Target, Aldi, and Amazon Fresh, are trying to fight back against inflation as customers become more and more price-conscious.

People are raising questions about the uncertain economy as they double-check the new price of eggs, from driving sales to cost-cutting trends.

Americans Are Paying More at the Grocery Store

American consumers are paying more and more at grocery stores and fast-food chains. These grocery stores are blaming the price hikes on inflation.

A man holding many grocery items next to his car trunk.

Source: Mick Haupt/Unsplash

Over 2022, grocery prices rose over 10%, which was the largest annual increase in prices since the 1970s.


Consumers Pull Back

According to Jacobin, Americans are spending 95% more for eggs, 33% more for a pound of ground beef, and 22% more for a gallon of milk than they did before the pandemic.

A woman with long brown hair making dinner on the stovetop

Source: On Shot/Pexels

But companies are expanding profits while consumers continue to pinch pennies. However, companies are expanding profits while consumers continue to pinch pennies.

Retailers Cut Back on Prices

While these price-cutting strategies were done with good intentions, this is not necessarily an indication that inflation is getting better.

Walmart employee stands next to a cart in the bread aisle

Source: Walmart

Instead, price cuts are more indicative of retailers’ attempts to compete in a heavily promotional environment without sacrificing profit margins.

Target and Walmart Scale Back

Last week, Walmart US CEO John Furner told analysts during an earnings call that the company has almost 7,000 rollbacks or temporary price reductions on goods. Days later, Target announced that 5,000 popular products were getting price cuts.

A woman pushes a red cart while shopping at Target

Source: Reddit

These major retailers acknowledge that consumers are pinching pennies, and are looking for the best prices when it comes to their weekly grocery shopping trip.

A Calculated Deception 

Even with these price cuts, these major retailers are not incurring losses to benefit consumers’ wallets.

A woman holds a can at a grocery store in the prepared foods section

Source: Freepik

“I don’t think Target or Walmart would be engaging in such large cuts without commitments from their vendors to cut the price at which they sell to retailers,” Preston Caldwell, senior U.S. economist at Morningstar Research Services, told FOX Business.


Cutting Costs 

Caldwell said “this could signal broader cost-cutting across the supply chain, including manufacturing and logistics.”

Many American dollar bills spread out on a surface.

Source: Mackenzie Marco/Unsplash

Retailers have been looking at cost-cutting measures across the board from staffing to limiting operating hours.


Inflation Is Cooling Down

Inflation has been falling considerably from a peak of 9.1% in June 2022 but remains above the Federal Reserve’s target of 2%.

A woman sitting at a wooden table. She has a pile of dollar notes and a pen in her hands. A notebook and calculator are on the table.

Source: Karolina Grabowska/Pexels

Prices at your local grocery store have been reflecting this wild wave of hot inflation since 2022, with prices rising 3.4% from the same period a year ago.


The Illusion of a Deal

Even if inflation makes competition a little tougher, capitalism remains in effect despite some prices being better at one store compared to another.

A photograph taken outside of a Walmart entrance

Source: Wikimedia

Instead, these price cuts are retailers’ attempts to get customers back into their stores by offering the best deals, while purchasing other full-priced items, whether needed or not.


Competition in the Inflation Period

Morningstar Research Services consumer equity analyst Noah Rohr argued that these price reductions “are more indicative of the competitive landscape than inflation.”

Inside view of a Target store showcasing customers using a set of escalators between floors, with clear signage for cart usage and store layout

Source: Wikimedia Commons

“Retailers increasingly see customer retention as critical to its business model, especially as they see opportunities to build up its membership programs, and alternative profit streams like digital advertising revenue,” Rohr said, citing examples like Walmart+ and the newly upgraded Target Circle 360 program.


Consumer Spending Is Still Low

In April 2024, Reuters reported that consumer spending is still staggering low even as inflation cools.

Shopping cart in grocery aisle

Source: 12963734 from Getty Images/Canva

“People have been pinched for a while, and it’s likely starting to show … This cooling is encouraging for slower inflation in the coming months,” said Elizabeth Renter, a senior economist at NerdWallet.


Will Consumers Start Spending More? 

In April, consumer spending, which accounts for more than two-thirds of US economic activity, increased by 0.2%, and analysts predict it will rise to a 3.3% pace in the October-December period.

A person handing another a ten-dollar bill.

Source: Karolina Grabowska/Pexels

With these predictions, then it’s no surprise that goods prices increased 0.2% in April after edging up 0.1% in the prior month.