Walmart is a top US inflation gauge

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As the nation’s biggest retailer and employer, Walmart is considered one of the best inflation gauges out there — and investors will be paying close attention when the company's second-quarter earnings for its 2023 fiscal year are released Tuesday morning.

CEO Doug McMillon warned last quarter that price increases may get worse, saying in May that "on the food side, we're seeing double-digit inflation, and I'm concerned that that inflation may continue to increase."

Walmart President and CEO Doug McMillon (Reuters / Reuters Photos)

He has since trimmed his own corporate workforce as profits and sales take an inflationary hit.

Last month, Walmart cut both its second quarter and full-year profit forecasts, saying that soaring prices were taking a toll on both the company and consumers.

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The retail titan pointed out that customers have become more focused on purchasing essentials, like groceries over items like clothing, as Americans' budgets feel the blow of inflation, which remains near a 40-year high.

A woman loads groceries into her car at Walmart in Coal Township, Pennsylvania, on Aug. 12, 2022. (Paul Weaver/SOPA Images/LightRocket via Getty Images / Getty Images)

"The increasing levels of food and fuel inflation are affecting how customers spend, and while we’ve made good progress clearing hard-line categories, apparel in Walmart U.S. is requiring more markdown dollars," McMillon said in a statement announcing the move. "We’re now anticipating more pressure on general merchandise in the back half."

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The Labor Department reported last week that price surges slowed in July for the first time in months — fueling hopes that inflation peaked earlier this summer after soaring for months on end.

A shopping cart outside a Walmart store in Torrance, California. (Bing Guan/Bloomberg via Getty Images / Getty Images)

Ticker	Security	Last	Change	Change %
WMT	WALMART INC.	92.50	+0.62	+0.67%

Leading up to Tuesday's results, investors appeared optimistic about Walmart. The company's shares climbed for the seventh straight day on Monday, ending at $132.63 and marking the stock's longest winning streak since October 2021.

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Economists polled by Refinitiv expect Walmart to post earnings per share of $1.62 for the second quarter, down 8.9% from earnings per share of $1.78 a year ago. But Wall Street anticipates revenue at $150.81 billion, which would be a 6.9% boost from the $141.05 billion the retail giant posted in the same quarter in 2021.

FOX Business' Megan Henney contributed to this report.