Walmart expands employee discount on groceries

As tariffs spark worries of higher prices, Walmart is dangling more discounts for its own employees.

The largest private U.S. employer said Wednesday that it will offer a 10% employee discount on nearly all groceries, including milk, meat and frozen food. That discount previously applied to fresh produce and most general merchandise items, such as clothing and toys, but only to other food during the holiday season.

In a memo to employees obtained by CNBC, Walmart’s chief people officer, Donna Morris, said the expanded price cut takes effect immediately. Walmart’s approximately 1.6 million U.S. employees qualify for the discount after their first 90 days with the company. With the expansion, the reduction will now include 95% of regularly priced items across the store, she said.

“We’ve heard your feedback that these savings make a real difference for you and your families,” she wrote in the memo. “And we have continued to hear that you would like to see this benefit expanded. In fact, it’s one of our most requested benefits.”

Walmart’s announcement comes as economists and companies closely watch how rising tariffs trickle through the U.S. economy and shape consumer spending. The consumer price index, a closely watched inflation metric from the Bureau of Labor Statistics, came in better than feared on Tuesday, with food prices flat. Yet the data still pointed to higher prices on some items. For example, household furnishings and supplies rose 0.7% month over month after climbing 1% in June.

Walmart itself has warned that higher prices are coming. In May, the company’s CFO, John David Rainey, told CNBC that the discounter was “wired for everyday low prices, but the magnitude of these increases is more than any retailer can absorb.”

The expanded employee discount could boost Walmart’s own business, too. It could motivate its huge workforce to spend more of their money at its stores and website rather than at other grocers or retailers. And the perk could also help attract and retain workers.

Walmart announced the expanded discount at its holiday meeting in Houston, which all store managers attended.

According to a video obtained by CNBC, Walmart U.S. CEO John Furner brought a Walmart store manager to the stage to read the surprise announcement that its 10% discount on food would become year-round.

“All I can think is about my associates back at home,” the store manager told Furner, as he thanked him. He said employees at his store “don’t know how they’re going to be paying their next meal and now this is going to help them.”

Walmart is scheduled to report its latest earnings on Aug. 21. The retailer’s expanded discount was first reported by The Wall Street Journal.