Deutsche Bank says higher diesel prices will erase Walmart's $2.9 billion tariff refund. Walmart now expects extra inflation in 2027, though the bank sees the retailer keeping a relative low-price advantage over competitors.
Walmart's expected gain from tariff refunds is set to disappear into fuel costs. Deutsche Bank says Walmart executives now expect higher diesel prices to wipe out the total expected benefit and to push prices back up. The bank made the point in a Thursday analyst note after a meeting with Walmart CFO John David Rainey.
Deutsche Bank's analysts wrote that elevated diesel pressures Walmart directly through transportation costs and indirectly as suppliers pass through higher costs. The company now expects an additional half to one percentage point of inflation in 2027, the note said. At that rate, extra fuel costs this year and next will completely erase the $2.9 billion refund.
Walmart said in August that it had been putting the bulk of that refund toward lower prices for shoppers. A Walmart spokesperson told Business Insider that, like other retailers, the company is not immune to sustained increases in fuel and transportation costs, but works to minimize their impact. The spokesperson added that many current discounts and holiday deals are time-bound, and some prices may return to regular levels afterward. That, the spokesperson said, should not be characterized as a broad-based price increase.
Deutsche Bank's analysts also noted that competing retailers are hiking prices in similar categories, which leaves Walmart with the relative low-price advantage. The bank also upgraded its rating of Walmart's stock.
Source: Business Insider
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