Costco expects inflation to be minimal overall, deflation expected for some items By Investing.com

© Reuters. Costco minimizes inflation overall, expects deflation on some items

In a very promising update on on-site and real-time inflation, warehouse club operator Costco (NASDAQ:) said there is little to no inflation overall and deflation for some larger ticket items.

“In our most recent fourth quarter discussion, we estimated year-over-year inflation to be in the 1% to 2% range. Our estimates for this quarter just ended with inflation in the 0% to 1% range.” Costo CFO Richard Galanti said during the company’s first quarter conference call Thursday evening:

He added that some large airline ticket items are actually experiencing deflation. This is mostly due to lower freight costs.

“Some large and bulky items, such as furniture sets, have experienced greater deflation due to lower freight costs compared to previous years, while some domestically produced, bulky and low-cost items have experienced greater deflation due to significant freight costs,” he added. “Some of the deflationary items were as high as 20 to 30 percent, mostly related to freight. For TVs, the average selling price was lower, but device prices were higher. And when you talk to buyers overall, inventory and SKU counts are looking good across all channels. And we’ve had good seasonal sales for the quarter so far.”