The CEO of Kroger said that food inflation is expected to reach normal levels in 2021, but that prices may fluctuate

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Kroger CEO Rodney McMullen told CNBC on Thursday that he does not expect food inflation to be an issue in 2021, and has warned that monthly prices could fluctuate.

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Kroger CEO says he expects normal levels of food inflation in 2021

“We expect annual inflation to be between 1% and 2%, which is a fairly normal figure,” McMullen said in “The Closed Bell.”

The outlook of supermarket executives is in line with household food price forecasts published by the U.S. Bureau of Labor Statistics Consumer Price Index. When inflation in the broader US economy came to the fore, McMullan made this comment.

Wall Street has been closely monitoring the yield on the 10-year US 10-year Treasury bond, which hovered around 1.547% Thursday, for several weeks. January yields were sometimes less than 1%, but the expected robust economic recovery from the coronavirus pandemic, coupled with a possible recovery from inflationary pressures, has improved yields.

Fed Chairman Jerome Powell said on Thursday that he expects “prices will be under some upward pressure,” but said this kind of period is not long enough for the central bank to hike interest rates. As the pandemic intensified, the Fed lowered its target range for short-term funding rates to nearly zero in March last year.

“We expect that as the economy reopens and is expected to recover, we will see higher inflation from the fundamentals,” Powell said at the Wall Street Journal jobs conference on Thursday.

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Regarding supermarket prices, McMullen said there could be changes, especially compared to the 2020 level at the start of the pandemic.

“If you look at the second quarter of last year, inflation for our meat is very high,” said McCullen. This happened after the health crisis led to the closure of the meat packaging plant.

“We expect deflation to be very strong this year, so overall we’re still at the estimated 1% to 2% level, but this step is going to be very bumpy,” MacMurlan said.

Kroger shares closed 2.5% at $ 34.09 a share on Thursday. The company earlier in the day reported fourth-quarter earnings, which exceeded analyst expectations, with earnings per share of $ 0.81. Quarterly sales were $ 30.74 billion, lower than Wall Street’s forecast of $ 30.86 billion.

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