Walmart just gave surprisingly downbeat guidance which has investors reassessing the likelihood of a recession.

The biggest retailer in the world just slashed both second quarter and full-year profit estimates on Monday, blaming rampant inflation and consumer pull-back in response.

Compared to its guidance in mid-May Walmart has said second quarter net sales growth will rise by 7.5% vs the 5% estimate in May. Second quarter operating income will drop 13-14%, vs a previous estimate of flat to up slightly. Second quarter earnings per share will be 8-9% down, vs a previous estimate of flat to up slightly. And full year earnings per share, which had been estimated to be down 1%, is now estimated to drop by 11-13%.

Walmart was down 9% in after hours trading.

Walmart CEO Doug McMillon in a statement said, “The increasing levels of food and fuel inflation are affecting how customers spend, and while we’ve made good progress clearing hardline categories, apparel in Walmart U.S. is requiring more markdown dollars. We’re now anticipating more pressure on general merchandise in the back half; however, we’re encouraged by the start we’re seeing on school supplies in Walmart U.S.”

Walmart now joins a slew of retailers reporting that their profits are dwindling as prices rise, and customers are increasingly cash-strapped and unable to take on the rising costs themselves.

It extends the concern which was first triggered by Target’s announcement it was liquidating tremendous amounts of merchandise that was not selling, and would view near-term profits more cautiously. Analysts have noted it could take Target several quarters to liquidate the inventory and return to regular operations.

After Target’s worrisome announcement, RH, Bed Bath & Beyond, and Kohl’s all issued warnings over their second quarter earnings.

All of this occurred against a backdrop of record-setting inflation reports, and Fed proclamations that they would do whatever was necessary to cool inflation, and that they would not let up until they saw clear and convincing evidence inflation had begun to be tamed.

Meanwhile retailers are reporting that what they are seeing appears unprecedented. Mickey Drexler, former CEO of Gap and J. Crew said in an interview, “I have never — maybe I don’t remember — seen as much discounting with as much merchandise with high percents off.”