Fed flags higher inflation, keeping pressure on Home Depot workers

The Federal Reserve said the personal consumption expenditures price index was still running about twice its 2% goal in May. Tariffs, higher energy costs tied to the Middle East conflict and the artificial intelligence buildout all added to the pressure.

The U.S. Bureau of Labor Statistics said consumer prices rose 0.5% in May and 4.2% over the prior 12 months, while energy prices jumped 3.9% in May after increases of 3.8% in April and 10.9% in March. The Fed kept its benchmark federal funds rate at 3.5% to 3.75% on June 17 and said the labor market was basically stable, with vacancies flat, layoffs subdued and labor supply growth slowing.

The company said first-quarter fiscal 2026 sales reached $41.8 billion, up 4.8% from a year earlier, while comparable sales rose 0.6% overall and 0.4% in the U.S. Ted Decker said results were in line with expectations and that underlying demand looked relatively similar to fiscal 2025, even as consumer uncertainty and housing affordability pressure stayed elevated.

Home Depot also reaffirmed fiscal 2026 guidance for total sales growth of about 2.5% to 4.5% and comparable sales growth from roughly flat to 2.0%. At the end of the quarter, the company operated 2,361 retail stores and more than 1,280 SRS locations across the United States, Canada and Mexico.

Home Depot said in May that customers were postponing large remodeling projects as inflation, high mortgage rates and uncertainty weighed on spending. Earlier, in February, the company beat fourth-quarter earnings estimates with same-store sales up 0.4%, helped by professional contractor demand and repair spending.

Ted Decker also pointed to stronger comparable sales in the U.S. Northern and Western divisions when weather supported outdoor projects. Home Depot has said tariffs present challenges to profitability and wants to maintain pricing levels where possible.