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Tag: Prices

  • Trump’s Mexico tariffs could raise produce prices in the next few days, Target CEO says

    Trump’s Mexico tariffs could raise produce prices in the next few days, Target CEO says


    Shoppers will likely see produce prices increase in the coming days due to President Donald Trump‘s tariffs on Mexican imports, Target CEO Brian Cornell said Tuesday.

    The Trump administration’s 25% levies on goods from Mexico and Canada, along with an additional 10% duty on Chinese imports, took effect Tuesday.

    Cornell said Target relies heavily on Mexican produce during the winter months, and the tariffs could force the company to raise prices on fruits and vegetables as soon as this week.

    “Those are categories where we’ll try to protect pricing, but the consumer will likely see price increases over the next couple of days,” he told CNBC in an interview after Target released its fiscal fourth-quarter earnings.

    “If there’s a 25% tariff, those prices will go up,” Cornell added.

    Cornell said prices could rise for produce like strawberries, avocados and bananas.

    Read more CNBC tariffs coverage

    During an investor day later that morning, Chief Commercial Officer Rick Gomez said it was too early to provide more specifics on the products and categories that will see price increases because “teams are working through it in real time” and the company has to look at pricing holistically.

    “I’ll give you an example. We have $3 Christmas ornaments. We don’t want to have $3.60 Christmas ornaments. We want to keep them at $3. That means we have to think about margin elsewhere. So maybe we’ll take pricing up a little bit on stockings to cover where we are in Christmas ornaments,” said Gomez.

    Another example he cited was Target’s “$5 tees.” The company wants to continue charging $5 flat for T-shirts. So while it may leave that price unchanged, it has more flexibility to hike prices for other products, such as dresses.

    “So maybe we’ll look at dresses a little bit differently,” said Gomez. “So it’s actually not as simple as just like flowing through cost. We have to think about this from a consumer perspective and make sure that our pricing architecture makes sense and puts us in a place where we are competitive and we have affordable options.”

    Target Corp. CEO, Brian Cornell speaks during an interview on the floor of the New York Stock Exchange November 28, 2014.

    Brendan Mcdermid | Reuters

    While inflation has eased in recent months, price increases have not moderated as much as the Federal Reserve has hoped. High costs for food and housing have continued to stretch consumer budgets, and Trump’s tariffs have raised fears that households will face even higher expenses. The president and his advisors have contended the duties will not raise prices for consumers.

    When asked if he had spoken to Trump directly about the impact tariffs will have on prices, Cornell told CNBC he has “not had that conversation” with the president and instead has relied on the retail industry’s lobbying arm to speak on Target’s behalf.

    “We’ve certainly been very active in Washington making sure that we provide our point of view, and we rely on [the National Retail Federation] and the industry to provide our perspective to a broad number of members of the administration,” said Cornell. “So we worked very closely with [the NRF and the Retail Industry Leaders Association] to make sure that collectively, our voice is being heard and we can share some of our insights and potential implications.”

    When asked about China, Cornell downplayed concerns about how the cumulative 20% duties on goods from the region will affect shoppers. Cornell said Target has reduced its reliance on China to about 30% of imports from more than 60%. It’s on pace to get that number down to below 25% by the end of the next year, added Gomez.

    The company has been able to reduce its reliance on China by turning to emerging manufacturing markets in the Western Hemisphere. Currently, only 17% of Target’s apparel — a key high-margin category for the company — is manufactured in China after production was shifted to countries like Guatemala and Honduras, said Gomez. That shift in supply chain is key to getting products to customers faster and also doesn’t come with the same raw material concerns associating with sourcing cotton in China.

    Cornell’s comments come after Target posted fiscal fourth-quarter earnings and revenue that topped Wall Street’s expectations but cast a pall over the current quarter. The company said it’s bracing for a weak current quarter in part because of how tariff concerns are impacting shopping, along with sliding consumer confidence, which dropped in February to its lowest level since 2021.

    Target’s guidance is the latest warning sign about the health of the economy, as it joined other retailers like Walmart, E.l.f. Beauty and Home Depot in giving weaker-than-expected first-quarter or full-year guidance.

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  • Egg prices are threatening a classic holiday tradition: Easter dye kits

    Egg prices are threatening a classic holiday tradition: Easter dye kits


    Melkinimages | E+ | Getty Images

    The egg aisle is anything but cheaper by the dozen these days — and that’s becoming a big problem ahead of the Easter holiday.

    The makers of Easter egg dye kits are bracing for the potential fallout if the egg shortage doesn’t begin to clear up before the April 20 holiday. For many companies that specialize in these activity sets, egg dye kits and related products make up a significant share of annual revenue. Diminished sales could have a major impact on their bottom lines.

    “I think sales will be down,” said Ashley Phelps, founder and CEO of Color Kitchen, a plant-based baking decoration company. “That remains to be seen, but I think it probably will be.”

    Wholesale egg prices have eclipsed record levels, reaching a high of $8.58 per dozen amid a domestic bird flu outbreak, according to global commodity data firm Expana. More than 52 million egg-laying birds have died, leaving the national flock at just 280 million, a critically low level, said Ryan Hojnowski, a market reporter at Expana.

    He noted that rising prices have slowed consumer demand as retail egg prices average around $6 per dozen or higher. Additionally, many stores have implemented purchasing limits, restricting the number of cartons that customers can buy at one time.

    The combination of inflated price and limited availability could curtail sales of eggs for the Easter holiday, ultimately affecting the demand for egg dye kits.

    Natural Earth Paint, a company that manufactures natural art supplies and craft kits for kids, typically sells between 40,000 and 50,000 egg dye kits around the Easter holiday, according to founder Leah Fanning. So far this year, the company’s retail partners have ordered only 7,000 kits.

    “It’s definitely a huge drop,” Fanning said, noting that most buyers have cited the egg shortage for the smaller orders.

    Fanning told CNBC that the egg dye kits have been Natural Earth Paint’s bestselling product for 13 years and kept the company in business for its first eight years. Of the company’s more than 40 products, the egg dye kit remains its “absolute bestseller.”

    She noted that while the majority of Natural Earth Paint’s sales come from retail locations, online sales typically pick up around three weeks before Easter. That leaves the chance that direct-to-consumer sales could get a boost in mid-March.

    A sign in a supermarket in New York City asks customers to limit their purchase of eggs to one carton, Feb. 13, 2025. The avian flu epidemic in the U.S. has sharply reduced the supply and raised the prices of eggs.

    Anadolu | Getty Images

    Color Kitchen said its Easter items represent 20% of the company’s total stock of items and outpace sales of all other items, including its Christmas icing kits.

    Phelps noted that most retailers order these egg kits months ahead of the holiday to ensure they are in stock immediately after Valentine’s Day. She said retailers “took a little less product this year” given sensitivity to the inflationary environment.

    “The other concern is that, some of the grocery stories, if they don’t sell through, then we get charged back for product that goes discounted to try and move it out of the store,” Phelps said. “So, that’s where we’ll get hit if the stuff that’s already been shipped out to grocery stores does not sell. That could potentially be very bad.”

    Phelps said 75% of Color Kitchen sales are from the shelf. The remaining 25% is from direct-to-consumer sales on its website and on sites such as Amazon.

    Walking on eggshells

    There are some companies that still expect to see solid business this Easter. The holiday takes place in late April, giving companies three more weeks of sales compared with last year.

    Hey Buddy Hey Pal, a company that makes the Eggmazing Egg Decorator, a crafting tool that spins eggs so kids can use markers to color them, generates between 85% and 90% of its annual revenue from its Easter product. Last year, the company generated $14 million in sales, a 22% bump from the year prior.

    Curtis McGill, co-founder of Hey Buddy Hey Pal, said retailers have ordered fewer of its products this year. Still, the company said it expects another jump of 18% in annual revenue as it’s set to sell between 600,000 and 700,000 egg decorators this year.

    Even as egg prices boil over, some dye kit makers see egg decorating as an essential tradition that few families will opt to skip, even if they reduce the number of eggs they use.

    Paas, the leader in the egg dye kit space, expects that some families will decorate fewer eggs this year, but said many will still participate in the tradition.

    “It’s just such a sticky tradition,” said Joe Ens, CEO of Signature Brands, which owns the 140-year-old iconic Paas brand.

    The company recently completed a survey of 120 consumers and found that 94% of them still plan on decorating eggs this holiday.

    “And the reason for that, other than the tradition being so important to consumers, is if you really break down the cost of the tradition, it is arguably the most affordable family tradition during any holiday,” he said.

    Paas expects to sell more than 10 million kits this year, one of the company’s strongest sell-ins ever, he said.

    Arts and crafts store chain Michaels said it’s already seeing shoppers opt for egg-inspired products. The company told CNBC that 43% of its total Easter sales so far this year have been for plaster, plastic and craft eggs.

    Michaels said a particular craft egg kit designed to “mimic the traditional egg-decorating experience” is selling nearly three times faster than the company had anticipated.

    Similarly, Hey Buddy Hey Pal expects some families may opt to purchase wooden eggs instead of real ones. Though the alternatives are typically more expensive than real eggs, they’re an opportunity to keep the creations around long after the holiday is over.

    “A lot could happen between now and then, we can continue to see an outbreak of avian flu and some different egg farms that hadn’t been affected,” said McGill. “It could get worse before it gets better. That’s not the projections, but at this point … I’m just gonna hold my breath until we get to April the 20th.”



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  • Kamala Harris wants to take on price gouging. It’s hard to find agreement on what it even is

    Kamala Harris wants to take on price gouging. It’s hard to find agreement on what it even is


    Democratic presidential candidate Vice President Kamala Harris and her husband, Doug Emhoff, stop at a Sheetz gas station in Coraopolis, Pennsylvania, on Aug. 18, 2024.

    Angela Weiss | AFP | Getty Images

    As she unveiled her most detailed economic plan yet this week, Democratic presidential nominee Kamala Harris pledged to fight price gouging in order to rein in voters’ grocery costs.

    The vice president first teased the federal ban in mid-August, prompting former President Donald Trump to attack the plan as “Soviet-style” price controls. Although Harris released more detail Wednesday as part of her 82-page economic plan, it’s still unclear what price hikes her administration would see as illegal “price gouging.”

    “The bill will set rules of the road to make clear that big corporations can’t unfairly exploit consumers during times of crisis to run up excessive corporate profits on food and groceries,” the Harris-Walz campaign wrote in the policy pitch, released about six weeks before Election Day.

    Higher prices — and who or what is to blame for them — have become a central theme in the presidential race, as steep grocery bills frustrate Americans and retailers anticipate a holiday season marked by deal-hunting. Harris and Trump have each proposed their own solutions to combat inflation, as Americans continue to pay more for groceries, energy, housing and other everyday expenses.

    In the last year, prices for food at home have risen just 1%, according to the Bureau of Labor Statistics. But groceries are still 25% more expensive than they were in August 2019, before supply chain snarls and inflation sent prices soaring.

    Voters will ultimately weigh in on what role government leaders should play in companies’ pricing. Generally, Republicans support fewer economic regulations, although Trump has suggested limiting food imports as a way to lower grocery prices. Economists have warned that the strategy would likely backfire.

    Halting price hikes is a popular idea with voters. Sixty percent of adult U.S. citizens support capping increases on food and grocery prices, according to a poll by The Economist/YouGov conducted from Aug. 25-27.

    Still, Harris would face a tough road to passing any price-gouging legislation in Congress, and it’s still not clear how cracking down on price increases would work in practice.

    What is price gouging?

    One of the challenges around accusing companies of price gouging — and promising to address it — is that the term means different things to different people. Rakeen Mabud, chief economist at progressive thinktank Groundwork Collaborative, said it typically is defined in two major ways.

    Economists and lawyers use a technical definition, which refers to when companies hike prices during emergencies, like doubling the price of bottled water during a hurricane, she said. Thirty-seven U.S. states already have laws that forbid price gouging in emergencies.

    But some consumers and politicians have embraced a looser definition: the practice of companies charging unfair prices just because those brands or retailers have the market power to do so, Mabud said.

    People shop near prices displayed in a supermarket on February 13, 2023 in Los Angeles, California.

    Mario Tama | Getty Images

    As prices for groceries and other goods soared in 2021 and 2022, a popular explanation emerged: “greedflation,” the notion that companies made inflation worse by raising prices on their products without offering more to customers, such as a larger quantity or new flavor. The once-fringe theory has gained mainstream support, including a study from the Federal Reserve Bank of Kansas City, which found that markups contributed “substantially” to inflation.

    But many economists — and Fed Chair Jerome Powell — don’t think that corporate profits are to blame for inflation. Instead, they attribute the sharp rise in prices to a variety of other factors, such as the tight labor market and supply chain issues.

    And regardless of what the term means, the companies involved have argued they are not to blame for higher grocery prices.

    “It’s critical that we get the economic facts right and avoid political rhetoric,” Sarah Gallo, senior vice president of product policy and federal affairs for the Consumer Brands Association, said in a statement in August. “The reality is that there are complex economic factors at play … The industry is supportive of the Federal Trade Commission’s consumer protection mission as well as the Department of Justice’s already established laws that prohibit price gouging and unfair trade practices.”

    Some retail leaders, including Target CEO Brian Cornell, have also pushed back against price gouging accusations waged against the industry. In an interview on CNBC’s “Squawk Box” in August, he said retailers lose customers to competitors if they hike prices too high.

    Yet Jharonne Martis, director of consumer research at LSEG, said there are some “red flags” catching politicians’ attention. She analyzed gross profit margins for a cross-section of companies, including grocers, consumer packaged goods companies and restaurants during the years before, during and after the Covid pandemic. The metric measures the percentage of net sales that a company makes compared with its costs.

    Some of those companies, including Kroger, Procter & Gamble and Domino’s Pizza, have higher gross profit margins than they did prior to the pandemic. She said that can reflect company-specific moves, such as Domino’s selling more pizza or Kroger customers gravitating to its more profitable private label brands.

    A customer shops in a Kroger grocery store on July 15, 2022 in Houston, Texas. 

    Brandon Bell | Getty Images

    An antitrust challenge to Kroger’s $24.6 billion acquisition of supermarket chain Albertsons has also increased scrutiny of companies’ pricing practices. The Federal Trade Commission is trying to stop the merger in court, and during the trial, Kroger’s top pricing executive testified that the retailer raised prices on milk and eggs more than required to account for higher costs. 

    In a company statement, Kroger described accusations of price gouging as “misleading” and said that nearly all costs of running a grocery store, including labor and transportation, have risen significantly since 2020.

    “We work relentlessly to keep prices as low as possible for customers in our highly competitive industry,” the statement said.

    On the other hand, Arun Sundaram, an equity research analyst at CFRA Research who covers grocers and consumer packaged goods companies, said he sees no evidence of price gouging in the grocery industry. He said price hikes are coming from companies passing on some of their higher production costs to customers.

    Higher margins can come from a variety of factors and aren’t necessarily a sign of corporate greed or price gouging, he said. They can rise because companies are operating more efficiently or because the mix of merchandise they sell has changed.

    Margins also can reflect the power of a brand and consumers’ willingness to tolerate large markups on fashionable or popular items, such as a unique pair of sneakers or a designer dress.

    But Sundaram said there may be some merit to the debate in the meatpacking industry, which has faced some price-fixing lawsuits. For instance, JBS’ Pilgrim’s Pride Corporation, one of the country’s largest chicken producers, pleaded guilty in 2021 to conspiring to fix chicken prices and pass on costs to consumers.

    A sign saying “Low price!” hangs from a shelf at a Target store in Miami, Florida, on May 20, 2024.

    Joe Raedle | Getty Images

    How shoppers are influencing prices

    Even if Harris never passes price-gouging legislation, resistance to high costs has already started to affect prices. So far, pushback from shoppers and grocers has largely moved the needle.

    Consumer staples companies such as PepsiCo and Campbell Soup have seen their sales volumes shrink as consumers opt for cheaper alternatives or snack less. And as inflation slows, most have raised their prices less — and less frequently.

    “You’ve got a shopper who has seen seven or eight [price hikes] in a year, and you know that they’re frustrated with it,” said Steve Zurek, vice president of thought leadership at market research firm NielsenIQ.

    Walmart, the nation’s top retailer and grocer by annual revenue, said it’s cracking down on price hikes by vendors that it carries. On an earnings call last month, CEO Doug McMillon said inflation has been stickier in aisles that carry dry groceries and processed foods. He said the big-box retailer is calling on its suppliers to keep prices stable or cut them.

    “We have less upward pressure, but there are some that are still talking about cost increases, and we’re fighting back on that aggressively because we think prices need to come down,” he said on the call.

    To address consumers’ frustration and slower sales, many food companies are bringing back discounts, according to Zurek.

    During the pandemic, many manufacturers stopped offering deals because they were struggling to keep shelves stocked. They didn’t need to boost demand because customers were already loading their pantries and stockpiling hand sanitizer and toilet paper. Supply chain issues exacerbated the problem, and inflation lifted sales without them needing people to buy more items.

    That dynamic has now flipped for many companies. And it isn’t just food companies offering deals.

    Target cut prices on thousands of items. Walmart has increased short-term deals on certain products, especially in the grocery department. And this week, Party City announced lower prices on more than 2,000 items such as balloons and candy as shoppers gear up for Halloween.

    Even so, shoppers are unlikely to see grocery store prices slashed across the board, Zurek said.

    “From an economic standpoint, you never want to be talking about deflation ­­— that’s almost as bad as inflation,” he told CNBC.

    But there have been a few examples of companies reversing price hikes. Robert Crane, J.M. Smucker’s vice president of sales and sales commercialization, said the food company has passed on “commodity relief” to consumers when possible, such as with its coffee brands, which include Folgers and Cafe Bustelo. In fiscal 2024, Smucker’s profit margins for its coffee division were 28.1%, down from 31.9% in fiscal 2019.

    But in early October, Smucker plans to hike its coffee prices for the second time this year, responding to rising commodity prices.

    As it justifies those decisions to top retailers, the company brings in professionals who can explain the green coffee commodity market, according to Crane.

    “We would review charts, we would talk about outlooks, and we would talk about what’s driving it — is it weather? Is it speculation driven?” Crane said.

    But that doesn’t mean stopping or slowing price increases is simple, said CFRA’s Sundaram.

    He said a long list of factors led to inflation, including a spike in supply-chain costs, wage increases stemming from labor shortages and poor weather in regions of the world that produce food such as corn, soybeans and cocoa. He’s skeptical that either administration can bring about a quick fix.

    “Because it was a complicated set of factors that led to this, it’s going to be a complicated set of factors that probably gets rid of this as well,” he said.



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  • Home prices hit record high in June on S&P Case-Shiller Index

    Home prices hit record high in June on S&P Case-Shiller Index


    Even as mortgage interest rates were rising, home prices reached the highest level ever on the S&P CoreLogic Case-Shiller U.S. National Home Price Index.

    On a three-month running average ended in June, prices nationally were 5.4% higher than they were in June 2023, according to data released Tuesday. Despite being a record high for the index, the annual gain was smaller than May’s 5.9% reading.

    The index’s 10-city composite rose 7.4% annually, down from 7.8% in the previous month. The 20-city composite was 6.5% higher year over year, down from a 6.9% increase in May.

    “While both housing and inflation have slowed, the gap between the two is larger than historical norms, with our National Index averaging 2.8% more than the Consumer Price Index,” noted Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, in a release. “That is a full percentage point above the 50-year average. Before accounting for inflation, home prices have risen over 1,100% since 1974, but have slightly more than doubled (111%) after accounting for inflation.”

    New York saw the highest annual gain among the 20 cities, with prices climbing 9% in June, followed by San Diego and Las Vegas with annual increases of 8.7% and 8.5%, respectively. Portland, Oregon, saw just a 0.8% annual rise in June, the smallest gain of the top cities.

    Since housing affordability has been a major talking point in this election cycle, this month’s report also broke out home values by price tier, dividing each city’s market into three tiers. Looking just at large markets over the past five years, it found that 75% of the markets covered show low-price tiers rising faster than the overall market.

    “For example, the lower tier of the Atlanta market has risen 18% faster than the middle- and higher-tiered homes,” Luke wrote in the release.

    “New York’s low tier has the largest five-year outperformance, rising nearly 20% above the overall New York region,” he continued. “New York also has the largest divergence between low- and high-tier prices. Conversely, San Diego has seen the largest appreciation in higher-tier homes over the past five years.”

    Prices in the overall San Diego market are up 72% in the past five years, but the high tier is up 79% versus 63% for the lower tier.

    The increase in prices came even as mortgage rates rose sharply from April through June, which is the period averaged on the index. Usually when rates rise, prices cool.

    The average rate on the 30-year fixed started April just below 7% and then shot up to 7.5% by the end of the month, according to Mortgage News Daily. Rates stayed over 7% before falling back under that level in July. The 30-year fixed is now right around 6.5%.

    “Mortgage rates have fallen since June, but there is evidence that even the decline in rates has not been enough to bring buyers back into the market,” said Lisa Sturtevant, chief economist at Bright MLS. “Some buyers are waiting for home prices — and not just interest rates — to come down,”

    While home prices should ease month to month going into the fall, due to seasonal factors and more inventory on the market, they are unlikely to drop significantly, and are expected to still be higher than they were last fall.



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  • Biden administration to lower costs for 64 drugs through inflation penalties on drugmakers

    Biden administration to lower costs for 64 drugs through inflation penalties on drugmakers


    US President Joe Biden speaks during an event at the National Institutes of Health (NIH) in Bethesda, Maryland, US, on Thursday, Dec. 14 2023. 

    Chris Kleponis | Bloomberg | Getty Images

    The Biden administration on Wednesday said it will impose inflation penalties on 64 prescription drugs for the third quarter of this year, lowering costs for certain older Americans enrolled in Medicare. 

    President Joe Biden has made lowering U.S. drug prices a key pillar of his health-care agenda and reelection platform for 2024. A provision of Biden’s Inflation Reduction Act requires drugmakers to pay rebates to Medicare, the federal health program for Americans over age 65, if they hike the price of a medication faster than the rate of inflation. 

    It is separate from another provision under the law that allows Medicare to negotiate lower prescription drug prices with manufacturers. On average, Americans pay two to three times more than patients in other developed nations for prescription drugs, according to the Biden administration.

    Some patients will pay a lower coinsurance rate for the 64 drugs covered under Wednesday’s announcement, which fall under Medicare Part B, for the period from July 1 to Sept. 30 “since each drug company raised prices faster than the rate of inflation,” according to a release from the administration.

    Some Medicare Part B patients may save as much as $4,593 per day if they use those drugs during the quarter, the release added.  

    More than 750,000 Medicare patients use the drugs each year, according to the release. The medications treat conditions such as cancer, certain infections and a bone disease called osteoporosis.

    The list includes Bristol Myers Squibb’s Abecma, a cell therapy for multiple myeloma; and Pfizer’s targeted cancer treatment for certain lymphomas called Adectris. It also includes Astellas Pharma and Pfizer’s Padcev, a targeted cancer treatment for advanced bladder cancer.

    The Biden administration said Padcev’s price has increased faster than inflation every quarter since the Medicare inflation rebate program went into effect last year.

    More CNBC health coverage

    “Without the Inflation Reduction Act, seniors were completely exposed to Big Pharma’s price hikes. Not anymore,” Neera Tanden, White House domestic policy advisor, said in the release.

    The Centers for Medicare & Medicaid Services plans to send the first invoices to drugmakers in 2025 for the rebates owed to the program.

    In December, Biden released a list of 48 prescription drugs that would be subject to inflation penalties during the first quarter of 2024.

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  • The 4 key things we’re watching in the stock market this holiday-shortened week

    The 4 key things we’re watching in the stock market this holiday-shortened week


    A trader works, as a screen displays a news conference by Federal Reserve Board Chairman Jerome Powell following the Fed rate announcement, on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 31, 2024. 

    Brendan McDermid | Reuters

    The Nasdaq Composite inched higher Friday to claim its fifth straight record close, as new data this past week showed a continued cooling of inflation and Treasury yields retreated.



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  • Here are 9 stocks that can benefit from Fed interest rate cuts

    Here are 9 stocks that can benefit from Fed interest rate cuts


    Stanley Black & Decker power drills are displayed for sale at a Home Depot store in Colma, California.

    David Paul Morris | Bloomberg | Getty Images

    The S&P 500 and Nasdaq extended their record rallies this week following cooler-than-expected consumer inflation data Wednesday morning. While Fed rate cuts would likely benefit the overall stock market, several names in the CNBC Investing Club portfolio — from housing plays to autos to biotech — could really get a boost.



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  • Walmart to shutter health centers, virtual care service in latest failed push into health care

    Walmart to shutter health centers, virtual care service in latest failed push into health care


    Walmart on Tuesday said it will close all of its health-care clinics across the country, a stunning reversal of its plans to bring its low-priced reputation to the dentist and doctor’s office along with the grocery aisle. 

    The big-box retailer said it would also shutter its telehealth provider, which it acquired for an undisclosed amount in 2021.

    Walmart will close 51 clinic locations across Arkansas, Florida, Georgia, Illinois and Texas, plans that won’t affect the company’s 4,600 pharmacies and more than 3,000 vision centers, the company said in a release. The clinics will close over the next 45 to 90 days, two people familiar with the matter who asked not to be named told CNBC. 

    Walmart blamed its plans to shutter clinics on a broken business model. In the release, it described the move as “a difficult decision,” but said it couldn’t operate a profitable business because of “the challenging reimbursement environment and escalating operating costs.”

    The shortage of health-care workers in the U.S. has also increased the company’s labor costs, according to the sources familiar with the matter. 

    The announcement comes just a month after Walmart said it planned to double the size of its clinic footprint by opening up 22 new locations this year and more in 2025. 

    Walmart’s announcement is also another sign of how challenging it is to disrupt and radically improve American health care – an expensive, complicated and entrenched system of doctors, insurers, drug manufacturers and other players that costs the nation more than $4 trillion a year. 

    Walmart opened its first Walmart Health clinic in Georgia in 2019, and then gradually opened more clinics next door to its big-box stores. Customers, who typically shopped Walmart’s aisles for groceries or household items, could also stop by for a doctor or dentist appointment or therapy session. The clinics offered other services, too, such as flu tests, X-rays and stiches.

    Those health-care services came with a low price tag, such as $30 for an annual check-up for adults, $45 for a 45-minute counseling session or as little as $25 for an adult teeth cleaning.

    At a conference in fall 2019, then-Walmart CFO Brett Biggs touted the company’s ambitions to investors. He referred to how Walmart had used its large size to bring down the price of many common generic drugs to as low as $4 at its pharmacies and planned to do that for other parts of health care.

    “It’s more than test and learn because we know that this is a place we can have a massive difference on how people live,” he told investors at the time. “When we think about ‘Save money, live better,’ we can do both with what we can do in healthcare. And so, we plan to be a big player going forward in what happens in healthcare.”

    Yet in the following years, Walmart opened new clinics at a slow pace and faced new challenges and competitive dynamics — including keeping its store shelves stocked and locations staffed during the Covid-19 pandemic. Walmart struggled with high executive turnover and cycled through numerous leaders of Walmart Health. And CVS Health, Walgreens Boots Alliance and Amazon all announced their own ambitions to open or acquire doctor offices. Amazon last year closed a $3.9 billion deal to buy primary-care provider One Medical.

    Meanwhile, on earnings calls and at investor meetings, Walmart CEO Doug McMillon and other company leaders instead highlighted other emerging and higher-margin businesses, such as its growing advertising business and its third-party marketplace.

    Going forward, Walmart will return to the health services it offered before the Walmart Health push: It will continue to operate its thousands of pharmacies and vision centers.

    Walmart said its clinics will continue to see patients with scheduled appointments until their doors close, the people familiar with the matter told CNBC. The company will also help patients find high-quality providers in their insurance networks to ensure they continue to get care, the people said.

    Walmart Health marks the latest failed push into health care by a high-profile company, following the disbandment of a joint venture between JPMorgan Chase, Berkshire Hathaway and Amazon in 2021. 

    Before it announced the closures, Walmart was among a slate of retail giants racing to build up their primary-care presence as demand grows for convenient and affordable medical care. Walmart grew its clinic business at a slower pace than its competitors, but some companies have struggled to balance their expansion plans with their swelling networks of patients. 

    Walgreens said in March it had closed 140 of its VillageMD primary-care clinics and plans to shutter 20 more to boost the profitability of its broader health-care division. Walgreens also recorded a nearly $6 billion charge in the first quarter related to the decline in value of VillageMD, which has generated disappointing returns since the company became a majority owner of the business in 2021. 

    Meanwhile, Amazon‘s health clinic operator One Medical now has more than 125 locations nationwide.

    Walmart has made several other plays in the health-care space, including partnering with an insurer and health system on care coordination in Florida. But Walmart will no longer see patients under that partnership moving forward, according to the two sources familiar with the matter.

    Walmart bought a chronic condition management platform called CareZone in 2020 for an undisclosed amount. 



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  • Bank of Japan ends the world’s only negative rates regime in a historic move, abandons yield curve control

    Bank of Japan ends the world’s only negative rates regime in a historic move, abandons yield curve control


    Japan flag and Japanese Yen cash banknotes (money, economy, business, finance, inflation, crisis)

    Javier Ghersi | Moment | Getty Images

    Japan’s central bank raised interest rates on Tuesday for the first time since 2007, ending the world’s only negative rates regime on early signs of robust wage gains this year.

    The Bank of Japan though cautioned it’s not about to embark on aggressive rate hikes, saying that it “anticipates that accommodative financial conditions will be maintained for the time being,” given the fragile growth in the world’s fourth-largest economy.

    The BOJ raised its short-term interest rates to around 0% to 0.1% from -0.1%, according to its statement at the end of its two-day March policy meeting. Japan’s negative rates regime had been in place since 2016.

    The BOJ also abolished its radical yield curve control policy for Japanese sovereign bonds, which the central bank has employed to target longer-term interest rates by buying and selling bonds as necessary.

    The central bank though will continue purchasing government bonds worth “broadly the same amount” as before — currently about 6 trillion yen per month.

    It would resort to “nimble responses” in the form of increased JGB purchases and fixed-rate purchases of JGBs, among other things, if there is a rapid rise in long-term interest rates.

    Scaling back of its radical asset purchases and quantitative easing, the BOJ said it would stop buying exchange-traded funds and Japan real estate investment trusts (J-REITS). It also pledged to slowly reduce its purchases of commercial paper and corporate bonds, with the aim of stopping this practice in about a year.

    These changes mark a historic shift and represent the sharpest pull back in one of the most aggressive monetary easing exercises in world, which was aimed at lifting the Japanese economy out of its deflationary spiral.

    The Japanese yen weakened to as much as 149.92 against the greenback, while the Nikkei stock index swung between gains and losses following the BOJ decision. Yields on the 10-year and 30-year JGBs dipped.

    Financial markets had repositioned over the past week as local Japanese news reports and preliminary wage negotiation results fanned speculation that the BOJ could normalize rates a month earlier, ahead of its April meeting.

    Inflation target in sight

    The BOJ had barely budged from its ultra-loose monetary policy posture despite “core core inflation” — which excludes food and energy prices — exceeding its 2% target for more than a year, as policymakers viewed price increases were largely imported.

    BOJ Governor Kazuo Ueda had repeatedly said the outcome of this year’s annual “shunto” wage negotiations would be key to sustainable price increases. The Bank of Japan expects higher salaries to lead to a virtuous spiral with domestic demand fueling inflation.

    “Services prices have continued to increase moderately, partly due to the moderate wage increases seen thus far,” the BOJ said in a statement.

    “As these recent data and anecdotal information have gradually shown that the virtuous cycle between wages and prices has become more solid, the Bank judged it came in sight that the prices stability target would be achieved in a sustainable and stable manner toward the end of the projection period of the January 2024 outlook report,” it added.

    Ongoing “shunto” spring wage negotiations between Japan Inc and its unionized workers have so far yielded a weighted average 3.7% spike in base pay, Rengo, Japan’s largest federation of trade unions said Friday in its first provisional update.

    This is even more robust than last year’s gains, which were the steepest spike in three decades.

    This is breaking news. Please check for updates.



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  • Japan’s ‘shunto’ wage negotiations hit fever pitch this week. Here’s why they matter

    Japan’s ‘shunto’ wage negotiations hit fever pitch this week. Here’s why they matter


    Akihiko Matsuura, president of UA Zensen, second left, raises his fist with members of the union during a rally for the annual wage negotiations in Tokyo, Japan, on Thursday, March 7, 2024.

    Kiyoshi Ota | Bloomberg | Getty Images

    At Japan’s highly anticipated “shunto” spring wage negotiations this year, the world’s largest automaker Toyota agreed to the biggest annual pay increase for workers in 25 years.

    Market speculation reached fever pitch this week as various corporate giants announced robust negotiated salary increments that in some instances exceeded what unions petitioned for.

    Bank of Japan Governor Kazuo Ueda has repeatedly said the outcome of this year’s wage negotiations will influence the central bank’s decision on when to exit the world’s last negative interest rate policy.

    Japan’s largest trade union grouping, known as Rengo, will announce the first collation of ongoing wage negotiations on Friday.

    This may figure prominently at the BOJ’s two-day policy meeting starting Monday to decide on its first rate hike since 2007.

    Even though “core core inflation” — which excludes food and energy prices — has exceeded its 2% target for more than a year, the BOJ has barely budged from its current ultra-accommodative monetary policy posture that has been in place since 2016.

    The BOJ’s thinking is that increased wages will stimulate consumer spending, lifting prices in a sustainable manner, and allowing more room for monetary tightening. 

    Here’s what you need to know about this year’s spring wage talks, which takes place annually in March.

    What’s happened so far?

    At the annual wage talks, management and unions of major companies across industries meet for negotiations to help determine employees’ pay and working conditions for the new fiscal year starting in April.

    The bulk of the “shunto” talks concluded Wednesday, with many large Japanese companies such as automakers Honda Motor, Nissan Motor, and electronics producer Panasonic acceding to their unionized workers’ requests.

    According to a Goldman Sachs tally of wage negotiations concluded so far, two of Japan’s largest steel companies agreed to large wage increases that exceeded union expectations — Nippon Steel agreed to 14.2% in wage increments, while Kobe Steel agreed to 12.8%.

    Japan’s largest trade union grouping, also known as Rengo, said earlier this week workers at major Japanese firms have asked for annual increases of 5.85% — fanning hopes of a three decade-high wage increase.

    Japan bar chart graph with ups and downs, increasing values, concept of economic recovery and business improving, businesses reopen, politics concept with flag

    Bank of Japan may exit the world’s last negative rates next week. Here’s what you need to know

    This is far higher than the 2023 increase of more than 3%.

    It marks a significant breakthrough in Japan, where real wages have stagnated since a banking crisis in the 1990s.

    Why does it matter? 

    The Bank of Japan has pursued a policy of aggressive monetary easing in an attempt to stimulate prices after Japan fell into deflation and prolonged economic stagnation. However, the country has struggled to shake off attitudes surrounding stagnant wages.

    Japan’s cultural focus on job security above higher pay is often blamed for stagnant wages.

    Bank of America says Japan Inc needs to make investments to improve productivity

    Almost a third of Japan’s workforce was engaged in part-time employment — often seen as a drag on wages — in January, according to the latest data from the country’s Ministry of Health, Labor and Welfare.

    Meanwhile, Japan’s headline inflation averaged 3.2% last year, but it slowed to 2.2% in January. 

    There have also been signs that the recent inflation has crimped domestic demand and private consumption in Japan.

    Japan’s economy averted a technical recession last week, bolstered by strong capital expenditure. However, private consumption fell 0.3% quarter on quarter — more than the provisional estimate of a 0.2% decline.

    What’s ahead?

    While Japan’s large corporations have the capacity to accede to a wage bonanza given their record profits, all eyes will be on the small and medium businesses — which account for up to 70% of jobs in the world’s fourth-largest economy.

    If major unions were able to get wage increases to about 5%, it would be enough to satisfy the BOJ that wages are rising and prompt them to shift monetary policy, Thierry Wizman, global interest rates and currencies strategist at Macquarie Group, told CNBC Monday.

    We expect the Bank of Japan to exit negative rates in April: Macquarie Group strategist

    Wizman said the change in policy would occur during the bank’s April meeting, but said that “risk has shifted to a March shift in policy.”

    Meanwhile, Goldman Sachs economists led by Tomohiro Ota wrote in a Tuesday note that they still believe the BOJ will terminate negative interest rates in April.

    “While a March rate hike cannot be ruled out, we believe that the BOJ’s communications at this juncture are not clear enough to justify assuming the March hike as the base case scenario,” they wrote.



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