Walmart CEO: Inflation on toys, clothing and sports equipment is easing

New York(CNN Business) Finally, shoppers are getting some good news about prices: Inflation is falling on discretionary merchandise just in time for the holidays, Walmart chief Doug McMillon said Tuesday.

"In toys, sporting goods, apparel, categories like that, prices have come down more aggressively," McMillon said in an interview on CNBC. "We're still inflated but we're not inflated nearly as much as we are in the other categories."

Prices on toys were up 3.1% in October annually, according to the latest data from the Bureau of Labor Statistics. Sporting goods were up 3%, while apparel was up 4.1%. All three were below the 7% overall rate of inflation.

Although prices on these goods are still rising, they're not rising by nearly as much as other categories, because retailers misjudged consumer demand and have excess inventory piled up. To clear out merchandise and entice shoppers to buy, stores have ramped up promotions.

Walmart (WMT) is the largest retailer in the United States and has a gauge into consumer habits and a wide array of products.

McMillon said that inflation was "most stubborn" on packaged food. Double-digit price increases on these essentials "are going to be with us for a while," he said.

Customers were adjusting their grocery habits by switching from name brands to Walmart's cheaper in-store brands, he said.

McMillon said budget-conscious customers were most pressured by inflation, but other shoppers "have money to spend."

Kroger (KR) also said last week that food inflation was easing. The company expects inflation to be between 2.5% and 3% next year.

"If you look at in our fresh departments, clearly, inflation is slowing down in many categories," Kroger chief Rodney McMullen said on a call with analysts.