As grocery inflation trends slightly upwards, Walmart Inc (NYSE:WMT) and BJ's Wholesale Club Holdings Inc (NYSE:BJ) are poised for stronger-than-expected quarterly comps.

According to JPMorgan analyst Christopher Horvers, the latest NielsenIQ data (as of Oct. 5) reveals a modest 2% grocery inflation rate for the third quarter this year, up from 1.5% in the previous quarter. This slight reflation, driven by both food and household products, could be a key tailwind for major grocery-heavy retailers like Walmart and BJ’s.

Storms Bring More Than Rain: Hurricanes' Impact On Grocery Sales

The storms are proving to be a silver lining for these giants, with Hurricane Helene (Sept. 26) and Milton (Oct. 9) fueling stock-up behaviors that lifted grocery comps for Walmart and BJ’s.

Walmart's U.S. grocery comps are projected to come in at +6.2%, well ahead of the estimated +4.5%, while BJ's is forecasted at +3.8%, above the +2.8% consensus.

Inflation Takes The Wheel: Driving Top-Line Growth For Retailers

Horvers points out that September's grocery inflation ticked up, supporting retailers like Walmart, which depend heavily on grocery sales.

This lift comes as Walmart's grocery category represents 55% of its core comp, and for BJ’s, it's even more crucial, accounting for 85%.

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Food & Household Inflation: Fueling A Quarter of Gains

Looking at the broader landscape, Horvers notes that third-quarter grocery inflation is slightly behind last year’s levels, but the recent upward trend could benefit retailers' top-line growth.

Specifically, both food and household product inflation accelerated in the past month—food inflation was +2.1%, and household products were +2.1%, up significantly from prior figures.

The bottom line is that Walmart and BJ’s are well-positioned to ride the wave of reflation and hurricane-fueled demand, setting them up for an impressive quarter ahead.

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Image created using artificial intelligence via Midjourney.