© Reuters. Costco seeing minimal inflation overall, and deflation on some items
In a very promising update on what is happening with inflation on the ground and in real-time, warehouse club operator Costco (NASDAQ:) said they are seeing little to no inflation overall and deflation on some bigger ticket items.
“Most recently in the last fourth quarter discussion, we had estimated that year-over-year inflation was in the 1% to 2% range. Our estimate for the quarter just ended, that inflation was in the 0 to 1% range,” Costo CFO Richard Galanti stated Thursday evening during the company’s first-quarter conference call.
He added that some bigger ticket items are actually seeing deflation, mostly due to lower freight costs.
“Bigger deflation in some big and bulky items like furniture sets due to lower freight costs year-over-year as well as on things like domestics, bulky, lower-priced items again, where the freight cost is significant,” he added. “Some deflationary items were as much as 20% to 30%, and again, mostly freight-related. TVs, the average sale prices have been lower while unit’s been higher. And talking to the buyers overall, our inventories and our SKU counts are in good shape across all channels. And so far, we’ve had a good seasonal sell-through during the quarter.”