Even valued Costco buyers aren’t immune to rising prices.
Costco has taken extreme measures to keep prices down, including producing its famous $1.50 hot dog combos, buying chicken farms to support its $4.99 rotisserie chickens, and even buying its own container ships in 2022.
Former CFO Richard Galanti explains why Costco is expanding its container fleet during Costco’s first-quarter 2023 earnings call
“Over the course of a year, year and a half, we controlled the shipping and delivery of nearly 50,000 containers, many of which would have been significantly delayed, but were expected to be cost savings compared to container costs at that time of between $1,000 and $2,000 per container,” he said.
It’s a sign of the chain’s commitment to keeping prices down, and Costco buyers are known for working with suppliers to get lower prices. But, as we’ve learned during the COVID-19 pandemic, Costco cannot control every aspect of its supply chain, which will result in higher prices on some key items this holiday shopping season.
Costco prices increased
Costco Chief Financial Officer Gary Millerchip shared the price inflation issues facing the company during its fourth-quarter earnings call.
“So the overall picture we’re seeing right now is, if I add up the cumulative impact across all commodity categories, we think inflation is currently in the low single digits and generally relatively stable compared to what we’ve seen in previous quarters,” he said.
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However, Millchip did report that some areas were operating at higher speeds than others, one of his comments hinting at broader issues during the holidays.
“The areas where we did see some growth this quarter were in non-food areas. It’s really — I wouldn’t say it’s in isolation, but the vast majority of it is in memory costs in consumer electronics and what you’d expect to be oil-related projects,” he said.
Costco’s broader inventory costs are also showing an impact. The retailer’s last-in-first-out expenses were $152 million in the fiscal fourth quarter, up from $43 million a year earlier. (LIFO is an accounting method that uses the cost of most recently purchased inventory when calculating cost of sales).
“Rising memory costs for consumer electronics and inflation in commodities directly affected by the ongoing conflict in the Middle East, such as natural gas, motor oils and resins, are the biggest drivers,” he added.
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Memory prices rise
Laptops, desktops, and TVs all use memory, and the price of memory is skyrocketing.
DRAM and NAND are the two main types of storage chips used in modern electronics, with DRAM acting as fast temporary working memory and NAND providing permanent long-term storage.
According to TrendForce, since the beginning of 2026, the supply of notebook DRAM and NAND Flash has significantly tightened, prices have soared, and the shortage of certain parts has become more obvious, which has increased the uncertainty of notebook brands when planning procurement strategies.
The website provides a clear example:
- Under normal circumstances, DRAM and SSD account for about 15% of the BOM (bill of materials) cost of a notebook computer. However, after several quarters of significant memory price increases, the share is expected to exceed 30% in the first quarter of 2026.
- In this case, the retail price of a $900 laptop may need to increase by more than 30% to maintain existing profit margins throughout the supply chain.
The problem isn’t just that consumers suddenly want more laptops and TVs. Memory suppliers are allocating more capacity to higher-margin artificial intelligence and server applications, tightening supplies of consumer electronics.
To keep it simple, think of it this way:
A bakery can make a wedding cake or dinner rolls in the same oven. When wedding cakes cost more, you get fewer rolls and the rolls cost more.
Costco isn’t immune to price increases
Even Costco can’t negotiate its way out of rising consumer electronics prices during the holiday shopping season.
RTM Nexus CEO Dominick Miserandino told TheStreet: “Look, Costco may be one of the best buyers in retail, but even Costco can’t negotiate the cost of chips down. If Dell, HP, Samsung and everyone else are paying higher prices for memory, they won’t eat that money forever.”
However, Costco will likely still offer the best deals, even if the prices are higher than in previous years.
“Costco may get better prices than others, or slightly less profit to keep the deal attractive, but ultimately shoppers will pay more. This holiday season, sale prices may look good. The problem is that the starting price is higher,” he added.
Matteo Rinaldi, director of the Global Semiconductor Institute run by Northeastern University, said the best move came after he asked a colleague what new laptop he should buy.
“He told me right away, ‘Well, you know, it almost doesn’t matter which one,'” Rinaldi told The Atlantic. “‘Buy now because prices are going up.'”
Prices have gone up.
“For example, the 13-inch MacBook Air M5, which starts at $1,099 and is currently selling for $949.99 at Costco, will soon retail for $1,299. That initial $150 discount turned into a $350 savings compared to Apple’s upcoming pricing,” The Verge reported in June.
Costco’s website shows the base model is out of stock, with the Apple Macbook Air M5 currently listed for $1,259.99 to $1,759.99, depending on configuration. Only Costco members can view pricing on its website, and prices may vary by region.
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