Arkansas [US], May 22, (ANI): US retail giant Walmart signalled that it could hike prices in order to compensate for the impact of higher fuel costs, according to an NBC report.

US retailers are grappling with higher gasoline prices as the shockwaves emanating from the Iran war keep the energy markets on edge.

The big-box retailer reported positive first-quarter earnings with revenue rising 7.3% to $177.8 billion. Same-store sales grew 4.1%, in-line with estimates. The retail giant witnessed gains in its e-commerce business and among higher-income shoppers. However, higher fuel prices took a toll on the bottom line with the company saying it absorbed $175 million in higher-than-planned fuel costs over the quarter, NBC reported.

'These are real impacts to cost of goods sold for us and our suppliers,' the NBC report quoted Walmart's chief financial officer, John David Rainey, who spoke to Wall Street analysts on a call.

'If the current elevated cost environment persists, we'd expect somewhat higher retail price inflation in Q2 and the second half of the year,' he added.

The retailer's shares plunged 7%, taking its valuation below the trillion-dollar mark. Its outlook disappointed Wall Street as the retail behemoth said that higher gasoline prices will dampen consumer sentiment.

Higher-income shoppers continue to spend money at the stores with confidence, while the lower-income earners navigate headwinds, Rainey said. Consumers are cutting back on spending in light of worries around higher fuel prices eating into their household budgets.

In what is a clear indication of consumer stress, Rainey pointed to the drop in average fill-up at Walmart's fuel stations, which fell below 10 gallons for the first time since 2022.

Higher fuel prices pushed consumer prices up nearly 4% in April, outpacing wage growth for the first time since 2023.

Tax refunds helped alleviate some of the pain caused by higher energy prices, but that may not be the case now, Rainey told CNBC in an interview.

The Iran war and the continued closure of Strait of Hormuz are posing one of the biggest challenges to the global energy market. The IEA recently said that the energy markets could enter the 'red zone' by July and August as supplies dwindle. The latest round of peace talks was clouded by uncertainty as Iran struck a stubborn stand on keeping the enriched uranium within the country. (ANI)