Walmart CEO Doug McMillon says the retail giant is managing for inflation and a slowdown in consumer demand that extends into 2023, and the economic conditions are changing what shoppers will see on the shelves of the nation’s largest retailer CNBC reports.

His comments came as sales slumped on Thursday even though the latest data on consumer prices earlier this week showed a cooling.

Grocery sales, responsible for 56% of Walmart’s revenue, is a key inflation read for the McMillon and company.

“We’re managing this item by item, category by category,” McMillon said in an exclusive interview with CNBC at the Hope Global Forum in Atlanta earlier this week. “We have a plan and adjusted our inventory to be ready for this next year.”

Millon’s comments came after November CPI report that showed consumer prices rose 7.1% year over year, which was below estimates, but before the retail sales decline posted on Thursday.

Food prices remained elevated, rising 10.5% year over year. Grocery sales require more regular shipments than general merchandise, and trucking prices are also elevated, approximately 35% higher year-to-date, according to data from Evercore ISI.

“What we’re seeing is that if you take the fresh food categories, commodities, things like proteins, things are starting to move. Chicken right now is more expensive, but beef is down. Fruit and vegetable is in pretty good shape,” McMillon said.

“But dry groceries, consumables is where we’re seeing the most stubborn and persistent inflation, mid double-digit inflation. And we’re not hearing from our suppliers looking forward that’s going to come down soon,” he said.

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