Inflation has been hitting the United States, and one of the most noticeable impacts on American consumers in recent years has been the across-the-board rise in prices. While Costco is known for offering competitive prices, savvy consumers have still noticed that this warehouse-style chain has quietly increased prices on some popular items, with more price hikes possibly on the horizon.
Costco has not raised prices across the board. During a recent earnings call, then-Chief Financial Officer Richard Galanti explained that due to lower shipping costs, some items, including furniture, have actually seen price decreases.
“Some of the product inflation is as high as 20% to 30%, and it’s largely freight-related,” he said.
However, what surprised members is that Costco has quietly raised prices on some popular items, with prices varying by location and changing over time.
Most Costco warehouses have gas stations where members can fill up at prices lower than most other stations. According to GOBankingRates, Costco’s gas prices are often 30 to 50 cents cheaper per gallon than other stations.
As a result, Costco’s hundreds of gas stations across the U.S. often see long lines. Members who regularly fill up there can easily offset their membership fee by saving on gas costs.
But this doesn’t mean that Costco always operates with slim margins on gas sales like it does with most of its merchandise. On the contrary, online financial advisory provider TheStreet says Costco’s aim is to keep its prices relatively cheap compared to competitors. When other companies raise gas prices to make more profit, Costco also adjusts accordingly.
TheStreet reported in late February that Costco has quietly raised gas prices recently to increase profit margins.
Galanti noted in a recent earnings call that Costco’s ability to adjust prices based on market conditions has increased profitability in gas sales. He pointed out, “When others make more, we get to make a little more too.”
The price of Kirkland Signature Organic Extra Virgin Olive Oil has also quietly gone up. EatThis, NotThat! reported at the end of March that amid soaring olive oil costs, consumers in the U.S. and Canada have recently found significant price increases in Costco’s olive oil.
In a Brooklyn store, the price of a 2-liter bottle of Kirkland Signature Organic Extra Virgin Olive Oil has surged from $16.99 in March 2023 to $24.99 this year, an $8 increase within a year. Specific prices may vary by region.
Over the past two years, adverse weather has hit olive groves globally, impacting harvests and leading to limited olive oil supply and rising prices. Therefore, even if you don’t shop at Costco, you may face olive oil price increases at your preferred grocery store.
Based on historical trends, Costco should have raised membership fees by now. In the past, the company would raise fees every 5 to 6 years. The last fee increase occurred in June 2017.
While Costco has not raised membership fees yet, Galanti hinted at a potential increase during the last earnings call. This would be the first fee hike since 2017. The annual fee for a Gold Star Membership might increase by $5, and the price of an Executive Membership could go up by $10. When that happens, you may need to reassess whether a Costco membership is still worth it for you.
The good news is, Galanti mentioned that Costco’s popular $1.50 hot dog and soda combo will not see a price increase for the time being.