The ripple effects of the ongoing Iran conflict are now creating tangible financial strain for American households, and one of the nation’s largest retail giants is sounding the alarm over shifting consumer spending habits. Walmart, the biggest private employer in the United States and a bellwether for national consumer trends, has confirmed that skyrocketing gasoline prices are prompting shoppers to pull back on discretionary purchases across other categories of its business.
The Middle Eastern conflict has triggered a sharp jump in global wholesale oil prices, which has directly translated to higher pump costs for drivers across the U.S. Fresh data from the American Automobile Association (AAA) underscores just how dramatic the increase has been: since the war began, the national average price for a gallon of regular gasoline has surged from $3 per gallon to $4.56.
In comments made to CNBC, Walmart Chief Financial Officer John David Rainey explained that earlier this year, the financial pressure of rising living costs was partially buffered by larger-than-usual tax refunds stemming from the One Big Beautiful Bill Act (OBBBA), the tax cut legislation signed under former President Donald Trump. But that temporary relief is now fading, and Rainey warned that consumers will begin to feel the full weight of elevated fuel costs in the current April-to-July financial quarter.
“ 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,” Rainey told CNBC. The CFO added that Walmart is monitoring pump prices closely, and current projections indicate that elevated costs will persist through the coming months.
Beyond non-essential spending, Rainey also flagged a more serious risk to grocery prices during a call with investors. If the ongoing closure of the Strait of Hormuz continues, key agricultural inputs including fertilizer, nitrogen and phosphates could face supply chain disruptions and shortages, which would force Walmart to raise prices on food staples for consumers.
Despite the grim forward guidance, Walmart’s first quarter financial results (covering February through April) tell a different story. The retailer reported a net profit of $5.3 billion for the quarter, representing an 18.8% year-over-year increase, while total quarterly sales climbed 7.3% to hit $177.8 billion. That strong growth trajectory is not expected to hold, however: Walmart projects that sales growth will slow to a range of 4% to 5% between May and July, as broad inflation and rising fuel costs cut into household purchasing power.
Investors reacted quickly to the downbeat forecast, pulling Walmart’s share price down by 7% in Thursday morning trading. As a key indicator of broader consumer health, the retailer’s warning has also raised new concerns across the U.S. retail sector about the impact of geopolitical conflict on domestic economic stability.