Walmart has raised its full-year sales growth forecast to an expected increase between 3.75% and 4.75%, up from a prior estimate of 3% to 4%, reflecting strong sales performance.

The retailer reported robust sales for the second quarter, exceeding expectations as competitive pricing attracted consumers dealing with rising costs.

Walmart's strong quarterly results offer insights into consumer sentiment amid concerns about a cooling U.S. economy and rising unemployment.

Despite U.S. inflation reaching its lowest level in over three years in July, consumers continue to face high prices, impacting their spending habits.

Arie Kotler, CEO of Arko Corp., noted a decrease in discretionary spending among consumers, attributing this trend to high credit card interest rates.

Despite high prices and interest rates, rising average wages have enabled many households to maintain their spending levels.

Sales of discretionary items, such as clothing and electronics, have shown slight improvement, indicating a shift as consumers begin to spend beyond essentials.

The rise in retail sales was significantly driven by a 3.6% increase in motor vehicle and parts sales, marking the largest increase since January 2023.

Walmart is actively pushing suppliers to lower prices, responding to cost pressures while emphasizing customer value over profit margins.

Consumer spending, which accounts for about two-thirds of U.S. economic growth, remains crucial and could influence the Federal Reserve's interest rate decisions.

The U.S. economy grew at a 2.8% pace in the second quarter, indicating resilience against high interest rates and easing recession fears.

Recent retail sales figures alleviate immediate recession concerns and suggest a more measured approach to potential Federal Reserve rate cuts.