Costco CEO Thinks Inflation Might Be Coming to an End

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KEY POINTS

  • Costco CEO Craig Jelinek says inflation may slow in 2023.
  • The head of the popular retailer warns that certain items -- like eggs -- will still be expensive.
  • Jelinek also says he's seeing some signs of a potential recession.

Bad news for bakers: Egg prices may continue to be high.

It's difficult to find business leaders who are optimistic about the economy right now, but Costco CEO Craig Jelinek struck some positive notes in a recent interview with Yahoo! Finance. Most importantly, he says there are some signs inflation is slowing, which will be a relief for consumers. However, warnings that a recession might be on its way were a little less encouraging.

Costco CEO says price rises may slow in 2023

Jelinek said he's felt as if the worst could be over in terms of inflation for a couple of months, though he can't be sure. One big element is that the container costs are coming down, which means transportation expenses are lessening. Shipping costs are one of several contributing factors toward the spiraling costs that have hit many Americans' bank balances this year.

Even so, it's still a mixed bag, particularly as the prices of certain consumables could remain high. "I don't see the egg market deflating at the moment," said the head of the popular warehouse chain. Egg prices have shot up because of a bad outbreak of avian flu, higher feed costs, and supply chain issues. 

Jelinek warns that there are still shortages of certain items, which will have an impact on prices. "But I think overall, you'll start to see some decrease in inflation -- deflation, I should say," he said. The latest data from the Bureau of Labor statistics showed that food at home in October was over 12% higher than the year before. Any reduction in prices will be excellent news for consumers.

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Jelinek sees some recession indicators

Jelinek said that it had been a difficult few years for everybody. "It's kind of like COVID started, and then it's been a hangover from COVID for, I think, the last three years in terms of challenges with getting merchandise, keeping your employees safe, keeping your members safe."

Asked whether he sees any signs of recession, Jelinek answered, "A little bit." He says sales have slowed for items like jewelry and really high-end TVs. The CEO says people are extremely aware of getting the best value for money right now. "They're always value-conscious," he says. "But I think now more so now than ever."

Jelinek's words came as JPMorgan CEO Jamie Dimon doubled down on his recession warnings. He is not alone -- recession warnings have come thick and fast from various business leaders and economists in recent months. The challenge for consumers who, as Jelinek rightly points out, are still reeling from the impact of the pandemic, is how to prepare. Just when we thought we'd put the worst of COVID-19 in our rearview mirrors, we got hit by huge spikes in living costs and warnings of a possible economic slowdown. 

That's a double whammy for a lot of consumers. On the one hand, financial experts stress the importance of building an emergency fund to cushion you against a potential recession. But at the same time, many Americans have had to dip into their savings or take on debt just to cover the essentials. It's difficult to save when you're struggling to cover day-to-day costs. If you factor in the recent interest rate hikes, which have made it even more expensive to carry debt, it's been a triple whammy for a lot of people.

How to reduce your grocery costs

Every dollar you can save on your groceries or other living costs is a dollar more you can use to pay down debt or save for the future. Here are a couple of ways you can cut costs:

  • Buy in bulk: Shopping at Costco is one way many families keep costs down. For a lot of households, the membership fee more than pays for itself through bulk savings, in-store discounts, and the inflation-resistant food court prices. 
  • Cut food waste: According to the USDA, as much as a third of the U.S. food supply goes into a landfill. Save money at home by freezing leftovers or food that's close to its expiration date. Use food waste apps to find produce that local stores and restaurants would otherwise throw in the garbage and buy it cheaply.
  • Maximize your rewards: If you have a rewards credit card that pays bonus points on groceries, use it every time you shop. You can combine any credit card earnings with rewards from cash back apps and in-store savings from coupons and other discounts.
  • Always shop with a list: Shopping lists are one of the best tools you have against impulse purchases. It can also mean fewer trips to the store -- which translates to fewer opportunities to spend money. And having a list can also make your shopping experience faster and less stressful.

When the CEO of a leading supermarket giant thinks price rises could slow in 2023, it is certainly good news. However, we're not out of the woods yet and next year could also bring an economic slowdown. If you can find ways to cut costs, reduce debt, and build up your emergency fund, you'll be as well-positioned as possible to handle whatever next year brings.

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