Inflation angst spreads as consumers spooked by rising gas bills

Summer is shaping up to be bleak for the U.S. consumer.

Americans have been struggling for months with high gas prices and persistent inflation and consumer sentiment has hit a record low. The boost some got from tax refunds is fading. Now retailers including Walmart Inc. and Lowe's Cos. are warning that fuel costs driven by the Iran war may begin to show up in prices of products on their shelves.

When? It's tough to predict, according to Home Depot Inc.'s chief financial officer, Richard McPhail. "There's a lot that is changing every day," he said in an interview. "We're just focused on being able to adjust as necessary."

So far, there are few forecasts that the storm of macroeconomic forces is likely to let up anytime soon. "We are concerned that the consumers have less ability to spend" even now, said Joe Feldman, an analyst at Telsey Advisory Group. Looking ahead, "the lower-income consumer is going to become even more challenged."

At Walmart, Chief Financial Officer John David Rainey said the company has seen some habits change: consumers bought fewer gallons per visit at Walmart pumps in the first quarter, with the average number falling below 10 for the first time since 2022. "That's an indication of stress," he said Thursday.

Eddie Benevides is feeling it, as filling his 2014 Jeep Cherokee takes big bites out of his budget. So he has new summer plans: he and friends will squeeze into one vehicle to carpool to North Carolina for a Formula One race in July rather than drive on their own.

"We're just not going to be able to do that," said Benevides, 21, a student at the New Jersey Institute of Technology. "I just have to mind my money."

If fuel costs stay where they are now, prices of goods at Walmart could rise in this quarter and the second half of the year, Rainey said. In the last quarter, they went up about 1.2%, below the national rate of inflation - currently at 3.8%.

At some point, swelling shipping expenses will simply have to be passed on, said Michael Skordeles, head of U.S. economics at Truist Advisory Services Inc. Transportation-cost increases are "real and stacking up."

Walmart absorbed most of those to stay competitive in the recent quarter, Rainey said, an approach that would help secure market-share gains "over the long term."

At Kroger Co., the thinking is similar. "We'll continue to sensibly push back on any price increases," Chief Executive Officer Greg Foran said in an interview. In fact, he said Kroger is planning the biggest price cuts in years as a strategy to gain market share.

Brandon Sink, chief financial officer at Lowe's, said the fuel prices were manageable during the first quarter but are getting harder to navigate, which the company's doing by working with suppliers, including adjusting contracts where possible.

For all the simmering anxiety about the summer, retailers' results in the latest quarter were mostly positive. Both Target Corp. and Walmart reported sales that beat Wall Street expectations. Target boosted its outlook for the full year, though that wasn't enough to prevent shares from falling sharply after executives expressed concerns about economic uncertainties and other business factors.

Higher fuel costs haven't yet pushed up prices of most goods in the U.S., according to government data. Affluent Americans have been propping up overall consumer spending, a primary engine for the economy; retail sales rose for a third-straight month in April.

But inflation concerns are still hitting consumer sentiment.

"It feels like we're heading in a direction where there's going to be these pressures on people," said Andrew Harig, a vice president with the grocery-industry trade group FMI. Already, the budget-conscious consumer "feels kind of worn out."

(With assistance from Mark Niquette.)

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This story was originally published May 22, 2026 at 1:10 PM.