Even Costco’s venerated buyers can’t get around certain price increases.
Costco has taken extreme steps to keep prices down, including manufacturing its own hot dogs for its famed $1.50 combo, buying a chicken farm to support its $4.99 rotisserie chicken, and even buying its own container ship back in 2022.
Former CFO Richard Galanti explained why Costco expanded its shipping container fleet During the retailer’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 that would have been greatly delayed and at an estimated savings as compared to the then-current shipping container costs of somewhere between $1,000 and $2,000 per container,” he said.
That shows the chain’s commitment to keeping prices down, and Costco’s buyers are also famous for working with vendors to get lower prices. But, as we learned during the Covid pandemic, Costco can’t control every aspect of the supply chain, and that’s going to lead to higher prices on some key items this holiday shopping season.
Costco has seen some prices go up
Costco CFO Gary Millerchip shared where the company was seeing inflationary prices during its fourth-quarter earnings call.
“So what we’re seeing overall currently, if I add together the sort of the cumulative impact in all of our merchandising categories, we feel like inflation currently is running in the low-single digits, and it’s relatively stable overall from what we’ve seen in prior quarters,” he said.
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Millerchip, however, did report that some areas were running higher than others, and one of his comments hints at broader problems for the holiday season.
“The area where we did see some increase in the current quarter was in nonfoods. And that was really — I won’t say it was isolated, but the vast majority of it was within memory costs on consumer electronics and the items that you would expect to be related to oil,” he said.
Costco’s broader inventory costs also showed the impact. The retailer recorded a $152 million LIFO charge in its fiscal fourth quarter, up from $43 million a year earlier. (LIFO is an accounting method that uses the cost of the most recently purchased inventory when calculating the cost of goods sold).
“Higher memory costs in consumer electronics and inflation on items directly affected by the ongoing conflict in the Middle East, such as gas, motor oil, and resins were the biggest drivers,” he added.
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Memory prices are going up
Laptops, desktops, and televisions all use memory and prices for memory are skyrocketing.
DRAM and NAND are the two main types of memory chips used in modern electronics, with DRAM acting as fast, temporary working memory and NAND providing permanent long-term storage.
“TrendForce reported that since the start of 2026, supply for notebook DRAM and NAND Flash has tightened significantly. Prices have surged, and shortages of certain components have become more pronounced, increasing uncertainty for notebook brands as they plan their procurement strategies,” according to the website.
The site provided a clear example:
- Under normal conditions, DRAM and SSD account for roughly 15% of a notebook’s BOM (bill of materials) cost. However, after several quarters of sharp increases in memory prices, that share is projected to exceed 30% in 1Q26.
- In this scenario, retail prices for a $900 notebook may need to rise by more 30% just to maintain existing profit margins across the supply chain.
The problem isn’t simply that consumers suddenly want more laptops and TVs. Memory suppliers are allocating more capacity toward higher-margin AI and server applications, tightening supply available for consumer electronics.
To make it simple, think of it this way:
A bakery can make either wedding cakes or dinner rolls in the same oven. When wedding cakes pay far more, you get fewer rolls, and the rolls cost more.
Related: History of Costco: Company timeline and facts
Costco won’t be immune from price increases
Even Costco won’t be able to negotiate its way out of higher prices for consumer electronics during the holiday shopping season.
“Look, Costco is probably one of the best buyers in retail, but even Costco can’t negotiate away the cost of the chip. If Dell, HP, Samsung and everyone else are paying more for memory, they’re not going to eat that forever,” RTM Nexus CEO Dominick Miserandino told TheStreet.
Costco, however, might still offer the best prices, even if they’re higher than previous years.
“Costco might get a better price than everybody else, or take a little less margin to keep the deal attractive, but eventually the shopper pays more. This holiday, the sale price may look good. The problem is the starting price is higher,” he added.
The best move, according to Matteo Rinaldi, the head of a global semiconductor-research institute run by Northeastern University, 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. “‘Just decide you want to buy now, because prices are going up.’”
Prices have already gone up.
“As an example, the 13-inch MacBook Air M5 that used to start at $1,099 and is currently on sale for $949.99 at Costco will soon carry a full retail price of $1,299. That initial $150 discount just became a savings of $350 compared to Apple’s upcoming pricing,” The Verge reported in June.
Costco’s website, which shows the base model as being out of stock, currently lists the Apple Macbook Air M5 at $1,259.99 through $1,759.99 depending upon the configuration. Only Costco members can see pricing on its website, and prices may vary by region.
