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Kroger looks to fight inflation at Walmart with new merger By Reuters

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© Reuters. FILE PHOTO: Apples are for sale in the production area as customers browse grocery shelves inside Kroger’s Ralphs supermarket amid concerns about the global growth of coronavirus cases in Los Angeles, California, US March 15, 2020. REUTERS/

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By Ariana McLemore and Siddharth Caval

NEW YORK (Reuters) – A $25 billion merger of Kroger (NYSE:) and Albertsons could eventually drive prices down for shoppers, at least according to a plan laid out by Kroger’s CEO Friday.

In an interview with Reuters, Kroger Company CEO Rodney McMullen said the savings from the deal would allow chains to lower prices for consumers. He cited $500 million in “cost savings from synergies” that the new entity could use to lower prices.

McMullen said the combined entity could better compete with “bigger, non-union” groceries — a reference to players like Walmart (NYSE:) Inc and targeting Corp (NYSE:), both of which also sell groceries.

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Once the merger is complete, the supermarket giant will create more than 5,000 stores including signage like Ralphs and Fred Meyer, as well as other regional supermarket chains with a predominantly union workforce.

Prices are the top priority for shoppers right now, with inflation soaring to its highest levels in several decades.

A Reuters review of a basket of goods on Kroger’s website found that charges for basic groceries like rice, sausage and bread are generally higher than Walmart’s.

A 14-ounce package of White Rice Minute is $2.99 ​​at Kroger.com for $2.14 at Walmart.com, while a six-pack of Hebrew National beef fetches $5.49 at Kroger.com for $5.18 at Walmart.com. A 20-ounce package of Sara Lee Classic White Sandwich Bread is $2.50 at Kroger, compared to $2.24 at Walmart.

Having a union workforce can be an advantage for a combined Kroger-Albertson in a tight labor market. Nearly two-thirds of Kroger’s 2,700 stores are affiliated with unions, as are the “majority” of Albertsons stores, the United Food and Trade Workers Union says on its website.

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Union workers in all industries earned more wages than nonunion workers in 2020 and 2021, according to the U.S. Bureau of Labor.

Walmart’s influence with suppliers such as Procter & Gamble (NYSE:) and Conagra often allows it to claim the lowest prices on merchandise. By contrast, grocery stores like Kroger and Albertsons often have to rely on free coupons or promotions funded by companies like P&G and Conagra in order to compete.

In response to inflation, many suppliers have cut the funding they set aside for discounts and price promotions, according to Mike McShane, vice president of buying and profit centers at URM Stores Inc, a grocery cooperative that serves stores in Washington, Oregon, Idaho and Montana. .

Walmart’s “everyday low price” strategy has helped it rank as the largest seller of groceries in the United States, even though its business model is closer to a wholesaler. Euromonitor data shows that 25.2% of all dollars spent on groceries in the US last year went to Walmart, while Kroger got 8.1% and Albertson got 4.8%.

Kroger said Friday it will also invest in its own brand or store-bought products, which brought in nearly $28 billion in Kroger sales in 2021, a way to offer shoppers cheaper alternatives.

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Analysts say private brands could be a key factor in distinguishing themselves from competitors including Walmart, Target and Dollar stores, which offer fewer branded grocery options.

If the combined entity can lower its prices, it may be able to reach more low-income shoppers. The median household income for an Albertson shopper is $83,000, while the median income for a Kroger shopper is $77,000, according to data from Numerator. Walmart shoppers have an average income of $73,000.

The merger is expected to be completed in 2024.

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Wall Street Retreats After Powell’s Rise As Dollar Falls By Reuters

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© Reuters. FILE PHOTO: An electronic board shows the indexes of the Shanghai and Shenzhen stock exchanges, in the Lujiazui Financial District, in the wake of the coronavirus disease (COVID-19) outbreak, in Shanghai, China November 14, 2022. REUTERS/Ali Song/File Photo

Written by Sinéad Caro and Mark Jones

NEW YORK/LONDON (Reuters) – Wall Street stocks fell on Thursday as investors digested economic data after a big rally in the previous session on signs the U.S. Federal Reserve will slow the pace of interest rate hikes.

The US dollar fell to its lowest level since August and Treasury yields sank after Federal Reserve Chairman Jerome Powell said on Wednesday that it was time to slow down interest rate hikes. He also pointed to a prolonged economic adjustment to rising borrowing costs and inflation only slowly coming down. He also pointed to the chronic labor shortage in the United States.

Oil rose on Thursday on the prospect of further supply cuts by OPEC+, and as Covid restrictions eased in China, the prospect of higher demand from the world’s largest crude importer increased.

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While equity investors were cheering signs of moderate inflation and an increase in US consumer spending in October, risk appetite waned after data showed US manufacturing activity contracted for the first time in two-and-a-half years in November as higher borrowing costs hit demand for goods. .

Investors still see inflation softening which supports the Fed chair’s signal that rate hikes may slow. In the 12 months through October, the personal consumption expenditures (PCE) price index rose 6.0% after rising 6.3% in September compared to the Fed’s target of 2%.

wrote Chris Zaccarelli, chief investment officer of the Independent Advisors Alliance in Charlotte, North Carolina.

It fell 284.6 points, or 0.82%, to 34,305.17, lost 2.01 points, or 0.05%, to 4,078.1 points, and added 20.63 points, or 0.18%, to 11,488.63 points.

The S&P rose 3% on Wednesday after Powell’s comments while the Nasdaq rose more than 4% and the Dow Jones added 2%.

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The pan-European index rose 0.95% and the MSCI measure of equities around the world rose 0.76%. Emerging market stocks rose 0.59%.

In currencies, it was down 0.756%, with the euro up 0.79%, to $1.0487.

The Japanese yen strengthened 1.57% against the dollar at 135.92 per dollar, while the British pound last traded at $1.2264, up 1.73% on the day.

In bond trading, moderate inflation in October initially pushed US Treasury yields lower after Wednesday’s drop.

The benchmark 10-year note fell 10.7 basis points to 3.594%, from 3.701% late Wednesday. The 30-year note fell 11 basis points to 3.7132% from 3.823%. The two-year note last fell 5.4 basis points to 4.3181% from 4.372%.

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Chart: Stock Rebound https://fingfx.thomsonreuters.com/gfx/mkt/lgpdkwbxkvo/Pasted%20image%201669900096733.png

Reopening of China

Allied to fresh signs that China is looking to ease COVID restrictions, Asian stocks closed up 1.36%.

China’s factory activity contracted in November, a survey of the private sector showed on Thursday as broad restrictions hampered manufacturers’ output, weighing on employment and economic growth in the third quarter.

Oil prices rose ahead of the Dec. 4 meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, in a group known as OPEC+. Although sources said on Wednesday that a policy change is unlikely, some feel an additional cut cannot be ruled out.

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It recently rose 2.84% to $82.84 a barrel and was at $88.86, up 2.17% on the day.

It added 1.7%, to $1,798.17 an ounce. The United States gained 2.83% to $1,795.40 an ounce.

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Elon Musk of Tesla congratulates Big Rival Ford

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Elon Musk and Tesla changed the way consumers think and look.

They have pushed the entire auto industry to switch to electric vehicles and make the technology the future of the sector, which is crucial to the economy.

Today, nearly every automaker—vintage automakers, start-ups, luxury brands, sports car manufacturers—offers an electric or hybrid model. Groups are investing billions of dollars to develop electric vehicles.

Consumers are also following developments, since their demand for these green vehicles is rising sharply even as cars remain expensive and the number of charging stations continues to lag. Charging still takes a long time, and electric vehicle owners have to plan their trips according to the geography of charging stations, which is a particular problem.

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Financials and Materials Drive TSX Higher By Reuters

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© Reuters. FILE PHOTO: Screen showing the price of a major Canadian stock index, the S&P/TSX Composite Index of the Toronto Stock Exchange, as it rose to a record high in Toronto, Ontario, Canada on January 7, 2021. REUTERS/Chris Helgren

(Reuters) – The main Canadian stock index rose on Thursday, supported by financial stocks and commodity-related commodities, while Canadian manufacturing data for November rose from the previous month.

At 09:33 AM ET (1433 GMT), the S&P/TSX Composite Index of the Toronto Stock Exchange rose 104.98 points, or 0.51%, at 20,558.24, approaching a six-month high.

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