Albertsons CEO Vivek Sankaran told CNBC on Wednesday that the US consumer has so far been able to cope with rising inflation.
“Inflation is higher. It is, say, between 3% and 4% if you just do the calculations for different months and normalize for them,” said Sankaran in an interview with Jim Cramer on “Mad Money”. “It used to be typically 1.5%, so it’s a little higher.”
Sankaran, who is also president of Albertsons, said he does not take rising prices lightly.
“However, this is happening in an environment where the consumer is really strong. We have not yet seen the consumer affected by this level of inflation,” said Sankaran.
Albertsons operates multi-brand grocery stores in more than 30 states and Washington DC
Last week, the Ministry of Labor reported that consumer prices were up 5% year over year in May, the highest level for the consumer price index in nearly 13 years.
Federal Reserve officials believe that as Covid’s economic recovery continues, price pressures will normalize, although Chairman Jerome Powell admitted on Wednesday that “inflation may be higher and more persistent than we expect”.
“I don’t know where it’s going in the next few months. … It could go a little higher, but again we have a strong consumer,” said Sankaran, adding that the grocery chain has plans to absorb the higher costs if it does got to. “But in my opinion we are far from that.”
Sankaran also told Cramer that some pandemic-era buying habits persisted even as the economy reopened due to public health restrictions. That is helpful to Albertsons’ financial performance, he said.
“They bought up meat and bought first-class beef. They exchanged for shellfish. They switched to premium wines and they stuck with that behavior, ”he said. “Even today we sell so many flowers.”